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enFri, 24 May 2019 13:27:10 -0500Sat, 25 May 2019 06:01:01 -0500Austrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismGovernment & Organizations/Non-ProfitnoAustrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismAll our conferences on such diverse topics as welfare, bureaucracy, war, and monetary reform, as well as our weekly seminars, are available online. In addition, you will find Mises media at the Institute Youtube channel and on Google video.All our conferences on such diverse topics as welfare, bureaucracy, war, and monetary reform, as well as our weekly seminars, are available online. In addition, you will find Mises media at the Institute Youtube channel and on Google video.32.589553-85.539913Subscribe with My Yahoo!Subscribe with NewsGatorSubscribe with BloglinesSubscribe with NetvibesSubscribe with GoogleSubscribe with PageflakesSubscribe with ODEOSubscribe with PodnovaEnd School Compulsory-Attendance Lawshttp://feedproxy.google.com/~r/MisesMedia/~3/k4a5gw_PRlM/46528
<p>Imagine if Congress were to enact a law that required everyone to attend church on Sundays. The overwhelming majority of Americans would go up in arms. The concept of religious liberty is so deeply ingrained in our American heritage that there is no way that people, including devout Christians, would accept such a law. That heritage was enshrined in the First Amendment, which prohibits Congress from enacting such a law.</p>
<p>Now, suppose things had been the exact opposite. Suppose that from the beginning, the Constitution had authorized Congress to enact compulsory church-attendance laws. Suppose that immediately after the Constitution called the federal government into existence, Congress had enacted a law requiring parents to send their children to church, in order to be educated on religious, moral, ethical, and Biblical principles. Suppose that we had been living with that national compulsory church-attendance law for the entire history of the United States.</p>
<p>Now suppose we libertarians were to advocate the repeal of the church-attendance law, which would enable families to decide for themselves whether to send their children to church or not. Can you imagine the outcry?</p>
<p>“Are you libertarians crazy? If we let families make that decision, no one would send their children to church. Most parents are just too irresponsible. How could we be certain that children would receive the right education and training when it comes to morality, ethics, and religion? Wouldn’t some parents teach their children to be atheists or, even worse, to worship Satan? No, you libertarians are all off base. People aren’t ready for that type of freedom. Repealing the church-attendance law would destroy the moral, religious, and ethical foundation of American society.”</p>
<p>After all, isn’t that the mindset of many Americans when they hear libertarians calling for the repeal of compulsory school-attendance laws? Don’t they say that people just aren’t ready for that type of freedom — that parents are too irresponsible — that children wouldn’t get educated — and that a free-market educational system would destroy America?</p>
<p>But the fact is that there is no difference in principle between religious liberty and educational liberty. Just as people shouldn’t be forced to send their children to church, they shouldn’t be forced to send their children to a state-approved organization for secular education and training. Families have the natural, God-given right to make educational decisions for their children without state interference or meddling, just as they do with respect to religious decisions.</p>
<p>People obviously make vastly different decisions when it comes to raising their children, not only on religious matters but also on countless other issues. People often disagree with how other people are raising their children. But Americans have developed a high degree of tolerance with respect to how people raise their children. We simply have to have that same degree of tolerance when it comes to education.</p>
<p>No one should be forced to attend church. By the same token, no one should be force to submit to a state-approved education. For that matter, no one should be forced to fund a state-approved school any more than he should be forced to fund a state-approved church. The state has no more business in education than it does in religion.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/k4a5gw_PRlM" height="1" width="1" alt=""/>Jacob G. Hornberger<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/school_0.PNG?itok=B8mUbXIy" width="240" alt="school_0.PNG" />46528May 25, 2019 - 6:00 AMFront page feedno Imagine if Congress were to enact a law that required everyone to attend church on Sundays. The overwhelming majority of Americans would go up in arms. The concept of religious liberty is so deeply ingrained in our American heritage that there is no way Jacob G. Hornberger Imagine if Congress were to enact a law that required everyone to attend church on Sundays. The overwhelming majority of Americans would go up in arms. The concept of religious liberty is so deeply ingrained in our American heritage that there is no way that people, including devout Christians, would accept such a law. That heritage was enshrined in the First Amendment, which prohibits Congress from enacting such a law. Now, suppose things had been the exact opposite. Suppose that from the beginning, the Constitution had authorized Congress to enact compulsory church-attendance laws. Suppose that immediately after the Constitution called the federal government into existence, Congress had enacted a law requiring parents to send their children to church, in order to be educated on religious, moral, ethical, and Biblical principles. Suppose that we had been living with that national compulsory church-attendance law for the entire history of the United States. Now suppose we libertarians were to advocate the repeal of the church-attendance law, which would enable families to decide for themselves whether to send their children to church or not. Can you imagine the outcry? “Are you libertarians crazy? If we let families make that decision, no one would send their children to church. Most parents are just too irresponsible. How could we be certain that children would receive the right education and training when it comes to morality, ethics, and religion? Wouldn’t some parents teach their children to be atheists or, even worse, to worship Satan? No, you libertarians are all off base. People aren’t ready for that type of freedom. Repealing the church-attendance law would destroy the moral, religious, and ethical foundation of American society.” After all, isn’t that the mindset of many Americans when they hear libertarians calling for the repeal of compulsory school-attendance laws? Don’t they say that people just aren’t ready for that type of freedom — that parents are too irresponsible — that children wouldn’t get educated — and that a free-market educational system would destroy America? But the fact is that there is no difference in principle between religious liberty and educational liberty. Just as people shouldn’t be forced to send their children to church, they shouldn’t be forced to send their children to a state-approved organization for secular education and training. Families have the natural, God-given right to make educational decisions for their children without state interference or meddling, just as they do with respect to religious decisions. People obviously make vastly different decisions when it comes to raising their children, not only on religious matters but also on countless other issues. People often disagree with how other people are raising their children. But Americans have developed a high degree of tolerance with respect to how people raise their children. We simply have to have that same degree of tolerance when it comes to education. No one should be forced to attend church. By the same token, no one should be force to submit to a state-approved education. For that matter, no one should be forced to fund a state-approved school any more than he should be forced to fund a state-approved church. The state has no more business in education than it does in religion. Austrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46528Mainstream Media's War on Julian Assangehttp://feedproxy.google.com/~r/MisesMedia/~3/3NCWKH3mpaw/46567
<p>The Bill of Rights doesn't mention that freedom of speech is restricted to a special class of establishment journalists. Freedom of speech is a universal property right, regardless of what the establishment-media gatekeepers say.</p>
<p>Original Article: <a href="https://mises.org/wire/yes-julian-assange-journalist-%E2%80%94-shouldnt-matter" target="_blank">"Yes, Julian Assange Is a Journalist — But That Shouldn't Matter"</a>.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/3NCWKH3mpaw" height="1" width="1" alt=""/>Ryan McMaken<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/static-page/img/RadioRothbard_750x516_20180222_0.jpg?itok=ygeJvFvq" width="240" alt="Radio Rothbard" title="Radio Rothbard" />46567May 24, 2019 - 3:00 PMFront page feedno The Bill of Rights doesn't mention that freedom of speech is restricted to a special class of establishment journalists. Freedom of speech is a universal property right, regardless of what the establishment-media gatekeepers say. Original Article: "Yes, Ryan McMaken The Bill of Rights doesn't mention that freedom of speech is restricted to a special class of establishment journalists. Freedom of speech is a universal property right, regardless of what the establishment-media gatekeepers say. Original Article: "Yes, Julian Assange Is a Journalist — But That Shouldn't Matter". Austrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46567Socialists vs. Civil Societyhttp://feedproxy.google.com/~r/MisesMedia/~3/7Yx64hViD_o/46547
<p>The socialist regimes of the 20th century that succeeded in comprehensively imposing their designs and central plans on the societies over which they ruled attempted to abolish any and all of the preceding institutions of civil society. Edward Shils noted this in his 1991 essay “The Virtue of Civil Society,” explaining how such regimes went to great lengths to replace civil society with the omnipotence of the state in all things. Indeed, as Shils said, “Marxist-Leninists declared themselves to be enemies of civil society.”</p>
<p>Today’s democratic socialists insist that they have nothing to do with those others in the 20th century who also called themselves “socialists.” Those others were not real, or true, or the right kind of socialists. Therefore, the “new” democratic socialism should not have to carry any of the baggage of guilt by association through connection with those “bad” or mislabeled socialists of the recent past.</p>
<p>But listen to what our new democratic socialists want and propose. Ask yourself, If successful in bringing their plans to fruition, what would remain of the existing institutions of civil society in America? Government already monopolizes most of education from kindergarten through to the Ph.D. level. By calling for “free” schooling for all levels up to the doctoral degree, this means, in fact, that the federal government would pay for everyone’s education, at taxpayer’s expense, of course.</p>
<p>The money would now fully and completely pass through the conduit of political and bureaucratic hands. Curriculum, hiring and firing of faculty and administration, entrance requirements, standards for student retention and graduation would be even more effectively and comprehensively overseen, influenced, and finally controlled by those possessing government budgetary power than is the case today.</p>
<p>If higher education is already heavily politicized in our current climate of political correctness, identity politics, and ideological bias and manipulation, this trend would be merely accelerated if there is nothing outside of the orbit and oversight of the government since everyone would have their “right” to “free” government-paid higher education.</p>
<p>How would this be any different in matters of medical treatment and health care? The federal and state governments already have an intrusive and highly heavy hand in the health care industry and how and what it provides. “Single payer” means a single provider that determines what medical treatment and health care services for whom, of what type, and to what extent, since the socialist state must focus on what is claimed to be the good of all the members of society as a whole.</p>
<p>Your health care quality and duration of life, and that of your family, will be in the hands of the government bureaucratic managers of the medical profession, hospital facilities, and other caregiving facilities. If you sometimes feel yourself nothing but an ignored or depersonalized number for health care treatment under the current politicized system, just wait for full government-socialized medicine under the “single payer” euphemism, and when you then become an even-smaller decimal with four zeros after the dot. (See my article <a href="https://www.thedailybell.com/all-articles/editorials/richard-ebeling-for-healthcare-the-best-government-plan-is-no-plan/"> “For Healthcare, the Best Government Plan Is No Plan.” </a> )</p>
<p>Centrally planned social and “identity” political justice? Forget about how you want to live, how and what you’d like to say, with whom you’d like to peacefully and voluntarily associate for mutually desired purposes, or the way you would like to honestly and non-violently go about earning a living and spending the money you’ve received through free exchange. Overcoming the injustices of the past — real and imagined — will require the progressives and democratic socialists to plan the redesigning of everyone’s place, status, opportunities, and outcomes throughout society. Every claimed unearned income, unjust social status, unfair employment, undeserved “privilege” will have to be reshaped according to the notions of the good society as seen inside the heads of those in charge of the political machinery of government.</p>
<p>Think of all the other corners and aspects of society, whether it is the physical environment, or culture, arts, and sciences, or investment patterns, or job locations, or the quantities and varieties of goods produced and supplied; each will have to be politically decided upon and imposed to make it compatible with “climate planning,” racial and gender fairness, and social egalitarianism. What corner of your part of society would not be under the determination and control of the state?</p>
<h4 dir="ltr">Democracy, Liberty, Socialism, and Civil Society</h4>
<p>Analysts and advocates of the institutions of civil society have long emphasized what Shils pointed out, that they also serve as intermediaries, as buffers, between the state and the citizen. They are the societal associations, organizations, and arrangements outside and independent of the government so that the individual does not have to become a slave to the plans and purposes of those in political power. The individual person can live free of the state — a status that shrinks to nothing when that individual is dependent upon and receives virtually all the things needed and wanted for life from the government.</p>
<p>But it’s “democratic” socialism! It’s what the people want as shown by those they elect to political office with the campaign agenda that the citizen-voters have expressed their desire for. It is the “will of the people.” Who can be against that, other than enemies of freedom, and oppressors who do not want the victimized to be liberated from their lives of injustice and unfairness?</p>
<p>But democracy is not liberty. Democracy is a political institutional means to determine who holds political office and for what period of time through a peaceful voting procedure that makes violent means unnecessary to remove or substitute those in positions of political authority and decision-making. And it is usually based on some form of majority-determining procedure.</p>
<p>Democracy carries with it the high respect and deference that it normally holds in most people’s minds because in modern times it gained political prominence along with and more or less at the same time in the 18th and 19th centuries as the emergent classical liberal ideas and ideals of individual liberty, impartial rule of and equality before the law, economic freedom, and constitutionally limited government. Democracy, therefore, came to be considered as inseparable from and confused in many people’s minds with freedom. But it need not.</p>
<p>Democratic (classical) liberalism linked the two together because in the eyes of many of the liberals in those earlier centuries the role of democratic reform was to make those in political power more directly accountable to the people over whom they ruled. But simultaneously the liberal agenda was to restrain the responsibilities and prerogatives of the government because political control, planning, regulation, and redistribution were considered abridgements of the personal freedom of the individual to control, plan, and regulate his own life, partly through those voluntary associations and interconnecting relationships of the institutions of civil society.</p>
<p>Democratic socialism, on the other hand, remains socialism, a concept that insists and demands that the “political” is to replace the “social” as understood as meaning individual self-governing in conjunction with the voluntarism of the peaceful community of free human beings. In this understanding, socialism is inherently antisocial.</p>
<p>Democratic socialism coercively confines and constrains all those living within what a majority or a coalition of minorities making up a voting majority wish to have imposed on the entire society. Notice that come the political triumph of progressive, democratic socialism everyone will have to accept and be limited to a higher education funded by and therefore fully under the oversight of the federal government. No one will be able to break out of the government plan as the single payer or provider of medical and health care throughout the country. Each person’s income, wealth, position and status, and opportunities for personal betterment will be forcefully straitjacketed within what those in governmental power deem to be the politically correct, the identity politics right, and the socially just.</p>
<p>The pluralism and peaceful competitions of the institutions of civil society with the underlying individual freedom that it represents and helps to secure is replaced by political monopoly and coercion through the powers of government to insist upon one size fitting all for anything and everything that such a democratic socialist regime considers to be properly within its orbit and responsibility.</p>
<h4 dir="ltr">Democratic Despotism Comes in Many Varieties</h4>
<p>Some authors in the past have referred to democratic despotism or totalitarian democracy. Once the antisocial agenda of socialism is in power and implemented, it can, at the end of the day, be nothing but despotic and totalitarian because it is either individuals making their own plans and coordinating their plans with those of others through the voluntary agreements of the market and those institutions of civil society, or it is the plans of some imposed on others through the use or threat of political compulsion. It comes down to freedom or tyranny, whether or not that tyranny has come to power through the use of bullets or votes dropped into a ballot box.</p>
<p>While I have focused on democratic socialism, the others that I referred to, nationalism, protectionism, and political paternalism, are all variations on the same theme. The Swiss classical liberal economist and political scientist William E. Rappard (1883-1958) long ago explained in an insightful essay, “Economic Nationalism,” (1938) that “nationalism, then, is the doctrine which places the nation at the top of the scale of political values, that is above the three rival values of the individual, of regional units and of the international community.… The individual subordinate to the state” is the hallmark of political and economic nationalism.</p>
<p>All that socialists argue about against nationalists and other forms of collectivism is for what purposes shall the coercive powers of the state be used in making all in society conform to some single or network of governmental plans that all are expected to obey and follow, if negative consequences are not to befall any individuals who attempt to act outside of the socialist scheme for that politically engineered bright and beautiful future.</p>
<p>Free market liberalism is the social system of a civil society based on and protective of personal liberty and human betterment. Socialism is the antisocial system of politics over people, governmental power instead of peaceful and free association, and a handful of imposed political plans instead of a pluralism of as many plans as there are people in the world.</p>
<p>Where is the freedom when one political plan replaces our many personal plans? What is liberating when the state becomes the political master and we are expected to be the obedient citizen-servants? Which one of these worlds — democratic market liberalism or democratic-planning socialism — do you want to live in?</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/7Yx64hViD_o" height="1" width="1" alt=""/>Richard M. Ebeling<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/static-page/img/shops.PNG?itok=04vC5bgd" width="240" alt="shops.PNG" />46547May 24, 2019 - 2:00 PMFront page feedno The socialist regimes of the 20th century that succeeded in comprehensively imposing their designs and central plans on the societies over which they ruled attempted to abolish any and all of the preceding institutions of civil society. Edward Shils noteRichard M. Ebeling The socialist regimes of the 20th century that succeeded in comprehensively imposing their designs and central plans on the societies over which they ruled attempted to abolish any and all of the preceding institutions of civil society. Edward Shils noted this in his 1991 essay “The Virtue of Civil Society,” explaining how such regimes went to great lengths to replace civil society with the omnipotence of the state in all things. Indeed, as Shils said, “Marxist-Leninists declared themselves to be enemies of civil society.” Today’s democratic socialists insist that they have nothing to do with those others in the 20th century who also called themselves “socialists.” Those others were not real, or true, or the right kind of socialists. Therefore, the “new” democratic socialism should not have to carry any of the baggage of guilt by association through connection with those “bad” or mislabeled socialists of the recent past. But listen to what our new democratic socialists want and propose. Ask yourself, If successful in bringing their plans to fruition, what would remain of the existing institutions of civil society in America? Government already monopolizes most of education from kindergarten through to the Ph.D. level. By calling for “free” schooling for all levels up to the doctoral degree, this means, in fact, that the federal government would pay for everyone’s education, at taxpayer’s expense, of course. The money would now fully and completely pass through the conduit of political and bureaucratic hands. Curriculum, hiring and firing of faculty and administration, entrance requirements, standards for student retention and graduation would be even more effectively and comprehensively overseen, influenced, and finally controlled by those possessing government budgetary power than is the case today. If higher education is already heavily politicized in our current climate of political correctness, identity politics, and ideological bias and manipulation, this trend would be merely accelerated if there is nothing outside of the orbit and oversight of the government since everyone would have their “right” to “free” government-paid higher education. How would this be any different in matters of medical treatment and health care? The federal and state governments already have an intrusive and highly heavy hand in the health care industry and how and what it provides. “Single payer” means a single provider that determines what medical treatment and health care services for whom, of what type, and to what extent, since the socialist state must focus on what is claimed to be the good of all the members of society as a whole. Your health care quality and duration of life, and that of your family, will be in the hands of the government bureaucratic managers of the medical profession, hospital facilities, and other caregiving facilities. If you sometimes feel yourself nothing but an ignored or depersonalized number for health care treatment under the current politicized system, just wait for full government-socialized medicine under the “single payer” euphemism, and when you then become an even-smaller decimal with four zeros after the dot. (See my article “For Healthcare, the Best Government Plan Is No Plan.” ) Centrally planned social and “identity” political justice? Forget about how you want to live, how and what you’d like to say, with whom you’d like to peacefully and voluntarily associate for mutually desired purposes, or the way you would like to honestly and non-violently go about earning a living and spending the money you’ve received through free exchange. Overcoming the injustices of the past — real and imagined — will require the progressives and democratic socialists to plan the redesigning of everyone’s place, status, opportunities, and outcomes throughout society. Every claimed unearned income, unjust social status, unfair employment, undeserved “privilege” will have to be reshaped according to the notions of the good Austrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46547Scott Horton Discusses Who’s to Blame in Venezuela, and Explains the Carnage in the Middle Easthttp://feedproxy.google.com/~r/MisesMedia/~3/WVCRGcrKkiA/46579
<p><a href="https://scotthorton.org/" target="_blank">Scott Horton</a> returns to the podcast to share his wealth of knowledge on a variety of topics. Bob first gives Scott the opportunity to express his unhappiness with <a href="https://mises.org/library/no-ilhan-omar-wasnt-taken-out-context" target="_blank">the recent episode on Ilhan Omar</a>. Then, they discuss the economic crisis in Venezuela, the carnage in the Middle East, the Mueller Report, and finally answer questions from the BMS Secret Facebook Group.</p>
<p>For more information, see <a href="https://bobmurphyshow.com" target="_blank">BobMurphyShow.com</a>. <em>The Bob Murphy Show</em> is also available on <a href="https://itunes.apple.com/us/podcast/bob-murphy-show/id1441789978?ls=1" target="_blank">iTunes</a>, <a href="https://www.stitcher.com/podcast/bob-murphy-show" target="_blank">Stitcher</a>, <a href="https://open.spotify.com/show/0tfuV0zn9W0hXuL8AkMPGI">Spotify</a>, and <a href="https://mises.org/itunes/732" target="_blank">via RSS</a>.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/WVCRGcrKkiA" height="1" width="1" alt=""/>Robert P. Murphy, Scott Horton<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/static-page/img/BobMurphyPodcast_750x516.png?itok=HFyx6Yti" width="240" alt="The Bob Murphy Show" title="The Bob Murphy Show" />46579May 24, 2019 - 1:30 PMFront page feedno Scott Horton returns to the podcast to share his wealth of knowledge on a variety of topics. Bob first gives Scott the opportunity to express his unhappiness with the recent episode on Ilhan Omar. Then, they discuss the economic crisis in Venezuela, the Robert P. Murphy, Scott Horton Scott Horton returns to the podcast to share his wealth of knowledge on a variety of topics. Bob first gives Scott the opportunity to express his unhappiness with the recent episode on Ilhan Omar. Then, they discuss the economic crisis in Venezuela, the carnage in the Middle East, the Mueller Report, and finally answer questions from the BMS Secret Facebook Group. For more information, see BobMurphyShow.com. The Bob Murphy Show is also available on iTunes, Stitcher, Spotify, and via RSS. Austrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46579Confronting the Myths about "Arming Teachers"http://feedproxy.google.com/~r/MisesMedia/~3/wzyawiu-OJ4/46572
<p>There is a disproportionate buzz about the newly signed Florida legislation that allows its school districts (each at its own discretion) to authorize concealed carry of firearms by teachers in their schools.</p>
<p>Why disproportionate? Because the Marjory Stoneman Douglas High School Public Safety Act, signed into law in March 2018 soon after the Parkland mass shooting, had already established the “Coach Aaron Feis Guardian Program” named after the coach who gave his life attempting to shield students with his body during that shooting. That program gave school boards the option of allowing school staff members to carry firearms, excluding most classroom teachers who were not JROTC teachers, or current service members, or current or former law enforcement officers.</p>
<p>Last year’s bill established a tough training standard, and left the decision to local school boards, both very good things. And since school staff who are not classroom teachers often comprise as high as 50% of the total, this approach was rational, if overly cautious, as school boards would still have the authority to approve or disapprove any applicant, without the no-teacher provision imposed by law.</p>
<p>The only change with the new law is that now all classroom teachers are also eligible to volunteer for the Guardian program. Note “eligible” and “volunteer” and you will understand why so much of the near-hysterical opposition to this law is baseless.</p>
<p>Of course, no one is actually “arming” any teachers — there is no arms room where they will line up to be issued weapons before filing into the trenches — much less “all” teachers, which is how the opposition likes to frame its strawman argument. They will arm themselves, if their school board votes to implement the Guardian program, and if they individually volunteer, pass rigorous screening and selection, and complete the legally mandated 132 hours of training. No one is guaranteed approval, and the standards they must meet are high.</p>
<p>The <em><u> <a href="https://www.miaminewtimes.com/news/broward-and-miami-dade-teachers-wont-carry-guns-even-if-governor-ron-desantis-signs-controversial-bill-11163067"> Miami New Times</a></u></em>, not known for smart or principled positions on any firearms issue, is one of the media outlets appalled that the legislature and governor, elected by citizens to legislate and govern, have not allowed themselves to be ruled by teachers’ unions, high school students, and some school boards and administrators. All those folks display their statist leanings by wanting to impose their own fears of positive protective measures on everyone. Under Florida law, if they (and, pointedly, the voters in their school districts) do not want to implement the Guardian program, they don’t have to. They can keep the Gun Free Zone signs over their doors and hope for the best. But that’s not enough for them; they think they know better than anyone else what is best for every school district in Florida.</p>
<p>Local control on this issue is a sound and sensible approach, in line with the rule of subsidiarity, the concept that decision-making should occur at the lowest level appropriate to its purpose. Local control is often preferable to decision making by officials far-removed from the affected population, less responsive to their local and regional preferences, and more likely to impose one-size-fits-all solutions. Voters can more easily influence or replace an unresponsive local elected official than his state or federal counterparts. Here it means what Florida and many other states have ruled: let the school districts decide for themselves.</p>
<p>Beyond that repugnant statist attitude, opponents of “arming” school staff try to bolster their argument with unsupportable claims and sloppy ‘research’ — textbook examples of confirmation bias, the tendency to only consider evidence that supports one’s preconceived notions. The Miami New Times cites an <u> <a href="https://giffords.org/2019/04/every-incident-of-mishandled-guns-in-schools/"> analysis </a> </u> by Gabrielle Giffords’ anti-gun organization that purports to show how dangerous introducing “more guns” to schools will be. It is such a sloppy piece of research and reasoning that I cannot let it go unanswered.</p>
<p>This long piece cites 67 “incidents of mishandled guns in schools” from all over America, from 2014 to the present, to support their opposition to concealed carry of firearms by school staff who meet the requirements of Florida’s Guardian program. But here’s the rub: only one of these 67 incidents involved a school staffer carrying a firearm under similar requirements. That one involved a Texas superintendent who left her authorized firearm locked in a district vehicle when she and her staff visited another district where she was not authorized to carry it – and then forgot to recover the weapon and left it in the van overnight, to be found in the morning.</p>
<p>Every other incident on this list actually supports the premises behind Florida’s Guardian program, and similar programs in the many other states with similar laws on the books. Not one carefully vetted armed staff member carrying a concealed firearm with knowledge and approval of their school board, in accordance with strict standards, in well over 1,000 schools around the country, was involved in any of the other 66 incidents cited.</p>
<p>Fifteen of the incidents on this list involved subjects who were not staff members at all; some of these were commissioned officers, while others were merely family members or or other visitors carrying firearms on school property in violation of the law. Another incident involved two coaches, but occurred off school property. Desperate to plump up the numbers, are we?</p>
<p>(For a tabulation of the incidents the Giffords piece cites, see <a href="http://www.warriorcapitalist.com/arming-teachers-fallacious-arguments-and-irrelevant-evidence/">here</a>.)</p>
<p>What this list actually does is to demolish the assertion often made by opponents of armed school staff, that guns in school should be left to the “armed professionals.” While the <em>Miami New Times</em> quotes some who seem to believe that armed officers make schools safer, Giffords does not think so, and on this point at least, we can at least understand the sentiment. Fully 27 of the 67 incidents in the Giffords study involve “armed professionals” — commissioned police officers or deputies assigned to a school, officers responding to a call for assistance or visiting for other reasons, or other uniformed security guards or school resource officers employed on site. These “armed professionals” had unintentional discharges (several of which <a href="https://www.local10.com/news/florida/coconut-creek/bso-deputy-accidentally-shoots-himself-while-responding-to-north-broward-preparatory-school-">injured themselves</a> or others), <a href="https://www.freep.com/story/news/local/michigan/2018/03/13/police-off-duty-officer-left-weapon-michigan-school/419436002/">left their weapons </a>in<a href="https://www.freep.com/story/news/local/michigan/2018/03/13/police-off-duty-officer-left-weapon-michigan-school/419436002/"> restrooms</a><a href="https://www.wbaltv.com/article/staff-member-fired-after-gun-found-in-school-restroom/13127088"> </a>or elsewhere unattended, and in two egregious cases, failed to stop <a href="https://kstp.com/news/no-one-hurt-when-third-grader-reaches-into-school-liaison-officer-holster-fires-gun-harmony-learning-center-maplewood/4773777/">a child from pulling the trigger</a> of their <a href="https://www.policeone.com/school-violence/articles/8547450-5th-grade-student-takes-school-guards-gun-from-holster/">holstered weapon</a>.</p>
<p>So much for "armed professionals" — we who are armed professionals know how little sustained, realistic, demanding training most officers undergo, and how easily complacency creeps in. Uniformed guards — commissioned or not — are not ten feet tall. They are unfortunately sometimes less dedicated and often less proficient than educators who understand their responsibilities “in loco parentis” and undergo rigorous and frequent training required by law and school district policy. Who has not heard educators saying, “we would sacrifice our lives to protect the kids in our care”? Give the tools and the skills to those who are willing, and they can do better than just sacrifice themselves like Coach Feis did at Parkland.</p>
<p>This is not to say that officers are all deficient in their skills and judgment — far from it — or that they cannot train to a high standard; but we who are trainers know without a shadow of a doubt that motivated civilians can do just as well, with the proper training. In the schools as on the streets, they are not volunteering to act as law enforcement officers, which is a very broad skill set indeed, but only to protect innocents against lethal threats — a very narrow skill set that comprises only a small slice of a police officer’s responsibilities.</p>
<p>In fact, what we do know is that responding police — even when do not have unintentional discharges like several in this list — do not protect schools against active shooters, because they almost always arrive too late; and that uniformed officers on site have a very spotty record. The uncertainty in a potential aggressor’s mind that is created by the prospect of an unknown number of trained staff members carrying concealed weapons at various but unpredictable locations throughout a school, appears to be a better deterrent than one uniformed officer, as evidenced by the complete absence of active shooter incidents in such schools. Arguably, if one is swayed by logic, they will prove to be a more effective and flexible defense as well, if that unprecedented day does arrive when a shooting happens in their school.</p>
<p>Again, with the exception of that Texas superintendent, none of these incidents involved an approved, trained, school staff member carrying a concealed weapon. The closest thing to it is the anomalous case of a teacher in Utah in 2014. State law there allows any resident with a concealed carry permit to carry in the schools. There is no requirement to even notify the school board or administration, much less be vetted or approved, or to be trained to any standard beyond the 8 hours of mostly classroom training required for a permit. This teacher dropped her weapon in a toilet stall (before school, with no students in the building); it discharged, shattering the bowl and cutting her calf with a flying shard. That’s not a laughing matter, or not only a laughing matter, but should be taken in context. Utah’s law has been in place for 20 years, and out of 700,000 citizens with concealed carry permits (14 million person-years?), this is the only reported occasion in which anyone has been injured by a legal concealed carrier’s firearm in a Utah school. And she doesn’t work there any more. It may also be significant that Utah has had no mass shootings in its schools, but we can only speculate. Pretty safe state, Utah, for all that their statute is far less prescriptive than Florida’s or many other states.</p>
<p>Gifford titles its piece “Every Incident of Mishandled Guns in Schools” and assures us that theirs is a “systematic analysis,” and that this list of 67 incidents is “comprehensive” for the date range of 2014-2014. But in reality, theirs is a list of those who violate the law and/or handle firearms incompetently — precisely the sort who are unlikely to volunteer in the first place, or to pass a careful vetting and selection process, or a demanding, standards-based training program, as required by statute in Florida and many other states that authorize concealed carry by school staff.</p>
<p>The actions of criminals and incompetents do not form a rational basis for criticizing or opposing these programs, which have been successful everywhere they are in place. Giffords has absolutely failed to make a case against armed school staff members in districts that opt in, under authorizing state law, with well-drafted programs and requirements.</p>
<p>Opponents of protecting our schools and children with armed staff on site will have to do better than this, to make a case worth listening to.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/wzyawiu-OJ4" height="1" width="1" alt=""/>Bill Tallen<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/static-page/img/holster1.PNG?itok=I9kHNUpO" width="240" alt="holster1.PNG" />46572May 24, 2019 - 10:45 AMFront page feedno There is a disproportionate buzz about the newly signed Florida legislation that allows its school districts (each at its own discretion) to authorize concealed carry of firearms by teachers in their schools. Why disproportionate? Because the Marjory StoBill Tallen There is a disproportionate buzz about the newly signed Florida legislation that allows its school districts (each at its own discretion) to authorize concealed carry of firearms by teachers in their schools. Why disproportionate? Because the Marjory Stoneman Douglas High School Public Safety Act, signed into law in March 2018 soon after the Parkland mass shooting, had already established the “Coach Aaron Feis Guardian Program” named after the coach who gave his life attempting to shield students with his body during that shooting. That program gave school boards the option of allowing school staff members to carry firearms, excluding most classroom teachers who were not JROTC teachers, or current service members, or current or former law enforcement officers. Last year’s bill established a tough training standard, and left the decision to local school boards, both very good things. And since school staff who are not classroom teachers often comprise as high as 50% of the total, this approach was rational, if overly cautious, as school boards would still have the authority to approve or disapprove any applicant, without the no-teacher provision imposed by law. The only change with the new law is that now all classroom teachers are also eligible to volunteer for the Guardian program. Note “eligible” and “volunteer” and you will understand why so much of the near-hysterical opposition to this law is baseless. Of course, no one is actually “arming” any teachers — there is no arms room where they will line up to be issued weapons before filing into the trenches — much less “all” teachers, which is how the opposition likes to frame its strawman argument. They will arm themselves, if their school board votes to implement the Guardian program, and if they individually volunteer, pass rigorous screening and selection, and complete the legally mandated 132 hours of training. No one is guaranteed approval, and the standards they must meet are high. The Miami New Times, not known for smart or principled positions on any firearms issue, is one of the media outlets appalled that the legislature and governor, elected by citizens to legislate and govern, have not allowed themselves to be ruled by teachers’ unions, high school students, and some school boards and administrators. All those folks display their statist leanings by wanting to impose their own fears of positive protective measures on everyone. Under Florida law, if they (and, pointedly, the voters in their school districts) do not want to implement the Guardian program, they don’t have to. They can keep the Gun Free Zone signs over their doors and hope for the best. But that’s not enough for them; they think they know better than anyone else what is best for every school district in Florida. Local control on this issue is a sound and sensible approach, in line with the rule of subsidiarity, the concept that decision-making should occur at the lowest level appropriate to its purpose. Local control is often preferable to decision making by officials far-removed from the affected population, less responsive to their local and regional preferences, and more likely to impose one-size-fits-all solutions. Voters can more easily influence or replace an unresponsive local elected official than his state or federal counterparts. Here it means what Florida and many other states have ruled: let the school districts decide for themselves. Beyond that repugnant statist attitude, opponents of “arming” school staff try to bolster their argument with unsupportable claims and sloppy ‘research’ — textbook examples of confirmation bias, the tendency to only consider evidence that supports one’s preconceived notions. The Miami New Times cites an analysis by Gabrielle Giffords’ anti-gun organization that purports to show how dangerous introducing “more guns” to schools will be. It is such a sloppy piece of research and reasoning that I cannot let it go unanswered. This long piece cites 67 “incidents oAustrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46572Does the State Care More About Tax Evasion than Murder?http://feedproxy.google.com/~r/MisesMedia/~3/jFfayFFrfrw/46533
<p>Rape and murder are violent acts. Ordinary citizens consider these to be far more serious offenses than acts of theft. Accordingly, as we allocate limited resources to solving all offenses, our expectation is that rape and murder will be given top priority.</p>
<p>However, the actions of politicians and bureaucrats appear to reflect a view that theft, or more precisely, <em>theft from government</em>, is considered a more heinous crime than the rape or murder of ordinary citizens. We see this in Canada where the government allocates more and more resources to the pursuit, prosecution, and conviction of tax evaders, while a majority of offenses which the public considers a higher priority go unsolved.</p>
<h4><strong>Government’s Performance Record</strong></h4>
<p>Statistics for various offenses in Canada (2008/09), extracted from a <a href="https://www.fraserinstitute.org/research/cost-crime-canada-2014-report"> report </a> compiled by the Fraser Institute, are shown in the following table<a class="see-footnote" id="footnoteref1_xj77fcp" title="Stephen Easton, Hilary Furness, & Paul Brantingham The Cost of Crime in Canada: 2014 Report (Fraser Institute, 2014) p 84. As per the authors of this report, the figure in column 7 represents “the days of the imposed sentence multiplied by the probability that he will actually face that sentence since even facing the judge is anything but a certainty … Column [7] is the product of percent cleared by charge, percent of charges becoming court cases, the percent guilty, the percent of guilty sentenced to incarceration, and number of days of the sentence.” Column 8 “reflects the duration of the sentence for the crime, the probability that he will be captured, charged, convicted, sentenced to incarceration, and the reality that he is eligible for parole after only a fraction of his sentence is served … Column [8] equals expected time to serve multiplied by the fraction of sentence before eligibility for parole.” (see pp 84 – 85)" href="#footnote1_xj77fcp">1</a>:</p>
<div class="media media-element-container media-image_no_caption"><a href="https://mises-media.s3.amazonaws.com/styles/max_1160/s3/friday1.PNG?itok=xUv2IxRV" title="friday1.PNG" class="colorbox" data-colorbox-gallery="gallery-file-83676-yTnT59RW67M" data-cbox-img-attrs="{"title": "", "alt": ""}"><img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/max_full/s3/friday1.PNG?itok=sOwedXU_" width="690" height="387" alt="friday1.PNG" title="" /></a></div>
<p>To facilitate our discussion, let’s define the solving of a crime as the capture <em>and</em> conviction of the perpetrator, regardless of sentence imposed. For example, on average, across the country, if there were 1,000 homicides, authoritarian law enforcement solves only 206 of these cases. Calculation: 1,000 x 66% (column 2) x 65% (column 3) x 48% (column 4) = 206. Then, 206 divided by 1,000 = 20.6%. Thus, 21% of homicides are solved and 79% are not solved.</p>
<p>Therefore, the performance record (2008-09) of authoritarian law enforcement in Canada is as follows:</p>
<p>79% of homicides are NOT solved</p>
<p>96% of attempted murders are NOT solved</p>
<p>90% of robberies are NOT solved</p>
<p>91% of sexual assaults are NOT solved</p>
<p>92% of other sexual offences are NOT solved</p>
<p>84% of major assaults are NOT solved</p>
<p>90% of common assaults are NOT solved</p>
<p>93% of uttering threats are NOT solved</p>
<p>92% of criminal harassment cases are NOT solved</p>
<p>97% of thefts are NOT solved</p>
<p>97% of break and enters are NOT solved</p>
<p>Note – these statistics reflect only those crimes which are <em><u>known</u></em> to the police.</p>
<p>This performance record justifies the public’s lack of confidence in the police and justice system, as evidenced by the dark blue segments of the lines in the following graph:</p>
<div class="media media-element-container media-image_no_caption"><a href="https://mises-media.s3.amazonaws.com/styles/max_1160/s3/friday2.jpg?itok=g9kbvaz2" title="friday2.jpg" class="colorbox" data-colorbox-gallery="gallery-file-83678-yTnT59RW67M" data-cbox-img-attrs="{"title": "", "alt": ""}"><img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/max_full/s3/friday2.jpg?itok=ZtfnLzZl" width="606" height="493" alt="friday2.jpg" title="" /></a></div>
<p>The abysmal performance of police and justice system bureaucracies, which gives rise to the public’s lack of confidence in them, explains why the majority of crimes committed against person and property are <em>not</em> reported to the police, thus remaining unknown to them. Statistics Canada conducts a <a href="http://www23.statcan.gc.ca/imdb/p2SV.pl?Function=getSurvey&SDDS=4504"> General Social Survey </a> every 5 years, in which it seeks to determine the extent to which people are victimized by various types of offences. The total number of crimes reported in the 2009 survey are a multiple of those known to police. For example, only 5% of sexual assaults and 26% of robberies were reported to police.<a class="see-footnote" id="footnoteref2_0eclz0x" title="Ibid., p 101" href="#footnote2_0eclz0x">2</a> Makes sense. Why expend time and effort reporting crimes to inefficient government bureaucracies which seldom produce justice?</p>
<h4><strong>Tax Evasion</strong></h4>
<p>In contrast, over the last four years, the government has increased the Canada Revenue Agency (CRA) budget by $1.6 billion to facilitate the investigation, prosecution, and conviction of tax evaders, and to make tax evasion more difficult.<a class="see-footnote" id="footnoteref3_wqg1z1l" title="See Canada’s federal budget for 2016 , 2017 , 2018 , and 2019 ." href="#footnote3_wqg1z1l">3</a></p>
<p>CRA assistant commissioner Ted Gallivan <a href="https://www.thestar.com/news/canada/2017/03/20/panama-papers-have-helped-fuel-a-more-aggressive-cra.html"> said </a> “it’s [tax evasion] a serious criminal offence and it comes with serious criminal consequences. … some actors … have to be locked up in jail to get them to discontinue their activities.” <a href="https://www.canada.ca/en/revenue-agency/news/newsroom/criminal-investigations-actions-charges-convictions/20190117-ottawa-dentist-sentenced-for-tax-fraud-and-laundering-proceeds-of-crime.html"> Indeed</a>, “from April 1, 2013, to March 31, 2018, the courts convicted 307 taxpayers for tax evasion of $134 million in federal tax. These convictions resulted in sentences totaling approximately $37 million in court fines and 2,949 months (246 years) in jail.”</p>
<p>Of course, we don't know how often people actually try to evade taxes, or what percentage of them are prosecuted by governments. But given that governments are increasing tax-prosecution budgets while so much<em> real</em> crime goes unpunished suggests governments have a serious problem with getting their priorities in order. But, as the drug war has long shown us, governments<a href="https://mises.org/wire/why-police-prefer-drug-raids-over-investigating-violent-crimes"> are often more interested in padding their budgets than in solving crimes</a>. </p>
<h4><strong>Markets Versus Government</strong></h4>
<p>On the free market, when we shop for food, clothes, cars, haircuts, electronics etc., service is <em>linked</em> to payment. If we do not like the product or service which we expect to receive in return for our payment, we are not obligated to complete the transaction because all transactions are voluntary. We can shop elsewhere. Thus, businesses are incentivized to accommodate our preferences because that is the only way to <em>persuade</em> us to part with our money.</p>
<p>In contrast, within the realm of government, transactions are not voluntary because coercion replaces persuasion, which means service is <em>severed</em> from payment. The government arbitrarily decides the price to be charged for a particular service (in our case, crime solving) and coercively extracts this money (taxes) from citizens. The government then arbitrarily determines the level of service it will actually provide, and to whom it will be provided. As <a href="https://mises.org/library/enterprise-law-justice-without-state-0"> Bruce Benson wrote</a>, “A person’s chances of police protection correspond closely to his position in the “geography of political power.” Much more attention is paid to the robbery of an important political figure than to the murder of an out-of-work, uneducated member of a racial minority.”<a class="see-footnote" id="footnoteref4_qekp73p" title="Bruce L. Benson The Enterprise of Law (The Independent Institute, 2011) p 133 [additional source provided by Benson: Richard Neely, Why Courts Don’t Work (New York: McGraw-Hill, 1982) p 131" href="#footnote4_qekp73p">4</a></p>
<p>Having already taken the money to fund massive police and judicial bureaucracies, the government has <a href="https://mises.org/wire/lack-police-accountability-shows-social-contract-isnt-working"> little incentive to solve violent crimes</a>. Less money allocated to this task means more money is available for exorbitant bureaucratic salaries. But those evil tax evaders are different. The government has not yet succeeded in taking their money, so politicians extract more tax dollars to hire people to hunt down these hardened criminals.</p>
<h4><strong>Conclusion</strong></h4>
<p>The government considers tax-evaders to be thieves because they are not honouring their tax obligations – they are <em>stealing</em> from the government. <a href="https://mises.org/wire/taxation-theft">Regarding taxation</a>, we can argue over who is <a href="https://mises.org/library/taxation-robbery">the actual thief</a>, but that goes beyond the scope of this article. What <em>is</em> clear, beyond any doubt whatsoever, is that the government considers the pursuit of tax thieves to be a higher priority than <a href="https://londonnews1.com/part-10-selling-victims-down-the-river/"> providing justice for victims </a> of rapists, murderers, and robbers. We know this is true because $1.6 billion allocated to the CRA to solve tax evasion crimes could instead have been allocated to municipalities for the purpose of solving violent crimes. It is appalling and contemptible that a majority of federal politicians shamelessly establish such priorities for crime solving.</p>
<p>The coercive nature of government creates perverse incentives. <a href="https://mises.org/library/enterprise-law-justice-without-state-0"> Professor Bruce L. Benson presents a compelling case that law making and law enforcement </a> are best left to the free market, where service is linked to payment, thus creating the necessary incentives for achieving excellent performance and justice for victims.</p>
<ul class="footnotes"><li class="footnote" id="footnote1_xj77fcp"><a class="footnote-label" href="#footnoteref1_xj77fcp">1.</a> Stephen Easton, Hilary Furness, & Paul Brantingham <em>The Cost of Crime in Canada: 2014 Report</em> (Fraser Institute, 2014) p 84. As per the authors of this report, the figure in column 7 represents “the days of the imposed sentence multiplied by the probability that he will actually face that sentence since even facing the judge is anything but a certainty … Column [7] is the product of percent cleared by charge, percent of charges becoming court cases, the percent guilty, the percent of guilty sentenced to incarceration, and number of days of the sentence.” Column 8 “reflects the duration of the sentence for the crime, the probability that he will be captured, charged, convicted, sentenced to incarceration, and the reality that he is eligible for parole after only a fraction of his sentence is served … Column [8] equals expected time to serve multiplied by the fraction of sentence before eligibility for parole.” (see pp 84 – 85)</li>
<li class="footnote" id="footnote2_0eclz0x"><a class="footnote-label" href="#footnoteref2_0eclz0x">2.</a> Ibid., p 101</li>
<li class="footnote" id="footnote3_wqg1z1l"><a class="footnote-label" href="#footnoteref3_wqg1z1l">3.</a> See Canada’s federal budget for <a href="https://www.budget.gc.ca/2016/docs/plan/ch8-en.html#_Toc446106856"> 2016 </a> , <a href="https://www.budget.gc.ca/2017/docs/plan/chap-04-en.html#Toc477707491"> 2017 </a> , <a href="https://www.budget.gc.ca/2018/docs/plan/chap-01-en.html#Cracking-Down-on-Tax-Evasion-and-Combatting-Tax-Avoidance"> 2018 </a> , and <a href="https://www.budget.gc.ca/2019/docs/plan/chap-04-en.html#Improving-Tax-Compliance"> 2019 </a> .</li>
<li class="footnote" id="footnote4_qekp73p"><a class="footnote-label" href="#footnoteref4_qekp73p">4.</a> Bruce L. Benson <em>The Enterprise of Law</em> (The Independent Institute, 2011) p 133 [additional source provided by Benson: Richard Neely, <em>Why Courts Don’t Work </em>(New York: McGraw-Hill, 1982) p 131</li>
</ul><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/jFfayFFrfrw" height="1" width="1" alt=""/>Lee Friday<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/ffs_1.PNG?itok=2ZnDkA1u" width="240" alt="ffs_1.PNG" />46533May 24, 2019 - 6:00 AMFront page feedno Rape and murder are violent acts. Ordinary citizens consider these to be far more serious offenses than acts of theft. Accordingly, as we allocate limited resources to solving all offenses, our expectation is that rape and murder will be given top prioriLee Friday Rape and murder are violent acts. Ordinary citizens consider these to be far more serious offenses than acts of theft. Accordingly, as we allocate limited resources to solving all offenses, our expectation is that rape and murder will be given top priority. However, the actions of politicians and bureaucrats appear to reflect a view that theft, or more precisely, theft from government, is considered a more heinous crime than the rape or murder of ordinary citizens. We see this in Canada where the government allocates more and more resources to the pursuit, prosecution, and conviction of tax evaders, while a majority of offenses which the public considers a higher priority go unsolved. Government’s Performance Record Statistics for various offenses in Canada (2008/09), extracted from a report compiled by the Fraser Institute, are shown in the following table1: To facilitate our discussion, let’s define the solving of a crime as the capture and conviction of the perpetrator, regardless of sentence imposed. For example, on average, across the country, if there were 1,000 homicides, authoritarian law enforcement solves only 206 of these cases. Calculation: 1,000 x 66% (column 2) x 65% (column 3) x 48% (column 4) = 206. Then, 206 divided by 1,000 = 20.6%. Thus, 21% of homicides are solved and 79% are not solved. Therefore, the performance record (2008-09) of authoritarian law enforcement in Canada is as follows: 79% of homicides are NOT solved 96% of attempted murders are NOT solved 90% of robberies are NOT solved 91% of sexual assaults are NOT solved 92% of other sexual offences are NOT solved 84% of major assaults are NOT solved 90% of common assaults are NOT solved 93% of uttering threats are NOT solved 92% of criminal harassment cases are NOT solved 97% of thefts are NOT solved 97% of break and enters are NOT solved Note – these statistics reflect only those crimes which are known to the police. This performance record justifies the public’s lack of confidence in the police and justice system, as evidenced by the dark blue segments of the lines in the following graph: The abysmal performance of police and justice system bureaucracies, which gives rise to the public’s lack of confidence in them, explains why the majority of crimes committed against person and property are not reported to the police, thus remaining unknown to them. Statistics Canada conducts a General Social Survey every 5 years, in which it seeks to determine the extent to which people are victimized by various types of offences. The total number of crimes reported in the 2009 survey are a multiple of those known to police. For example, only 5% of sexual assaults and 26% of robberies were reported to police.2 Makes sense. Why expend time and effort reporting crimes to inefficient government bureaucracies which seldom produce justice? Tax Evasion In contrast, over the last four years, the government has increased the Canada Revenue Agency (CRA) budget by $1.6 billion to facilitate the investigation, prosecution, and conviction of tax evaders, and to make tax evasion more difficult.3 CRA assistant commissioner Ted Gallivan said “it’s [tax evasion] a serious criminal offence and it comes with serious criminal consequences. … some actors … have to be locked up in jail to get them to discontinue their activities.” Indeed, “from April 1, 2013, to March 31, 2018, the courts convicted 307 taxpayers for tax evasion of $134 million in federal tax. These convictions resulted in sentences totaling approximately $37 million in court fines and 2,949 months (246 years) in jail.” Of course, we don't know how often people actually try to evade taxes, or what percentage of them are prosecuted by governments. But given that governments are increasing tax-prosecution budgets while so much real crime goes unpunished suggests governments have a serious problem with getting their priorities in order. But, as the drug war has long shown us, governments are often more interested in padAustrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46533Why Single-Payer Healthcare Is So Badhttp://feedproxy.google.com/~r/MisesMedia/~3/U0EhhJJO_aE/46569
<p>Compared to other types of universal healthcare systems, what we call "single-payer" healthcare is possibly the worst of all.</p>
<p>Original Article: <a href="https://mises.org/wire/single-payer-healthcare-worst-kind-universal-healthcare">"Single-Payer Healthcare Is the Worst Kind of Universal Healthcare".</a></p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/U0EhhJJO_aE" height="1" width="1" alt=""/>Ryan McMaken<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/static-page/img/RadioRothbard_750x516_20180222_0.jpg?itok=ygeJvFvq" width="240" alt="Radio Rothbard" title="Radio Rothbard" />46569May 24, 2019 - 5:45 AMFront page feedno Compared to other types of universal healthcare systems, what we call "single-payer" healthcare is possibly the worst of all. Original Article: "Single-Payer Healthcare Is the Worst Kind of Universal Healthcare". Ryan McMaken Compared to other types of universal healthcare systems, what we call "single-payer" healthcare is possibly the worst of all. Original Article: "Single-Payer Healthcare Is the Worst Kind of Universal Healthcare". Austrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46569Is the Sinking Italian Economy Just the Tip of the Iceberg?http://feedproxy.google.com/~r/MisesMedia/~3/xIFAXwO0K-0/46576
<p>The European Union at present is undoubtedly at a crossroads. The economies which were once reckoned as strong pillars of the EU are now on the verge of an erosion. Economists had given several warnings on the soaring <a href="https://www.bbc.com/news/business-13856580">debt issues</a> in many EU economies following the financial crisis in 2008. The EU's nightmare began with the <a href="https://www.abc.net.au/news/2015-07-20/fact-file-the-greek-debt-crisis/6621376"> economic breakdown of Greece </a> in 2015. Although <a href="http://time.com/3959164/germany-greece-bailout-deal-athens-merkel/"> Merkel’s Machiavellian plan of austerity measures </a> avoided the impending Grexit, they couldn’t do anything to hinder the inevitable Brexit.</p>
<p>One after another, threads are being knitted to this thriller, making the screenplay more complex to handle for the directors in Brussels. The country which is going to get featured next is none other than Italy. The third largest economy in the Eurozone is now a sinking ship. Latest statistics reveals that the current debt of Italy is around 130 percent of the total GDP which is nearly <a href="https://www.cfr.org/article/does-italy-threaten-new-european-debt-crisis"> 2.6 trillion </a> dollars, almost same as the <a href="https://www.investopedia.com/insights/worlds-top-economies/"> size of the Indian economy </a> in nominal GDP terms. The Italian economy is 10 times bigger than that of Greece, further alluding the intensity of this economic crisis. John Higgins and Adam Hoyes, economists at Capital Economics mentioned in a research note that "Unlike Italy's, Greece's debt-to-GDP ratio is on a downward trajectory and its debt has been restructured under far more favorable terms than Italy's. What's more, Italy's debt is much larger in absolute terms and poses a much bigger systemic risk for the euro-zone as a whole”.</p>
<p>Looking at the long term growth prospects, the statistics show a shocking result that Italy’s GDP per capita remains stagnant at the same level as 18 years ago.</p>
<div class="media media-element-container media-image_no_caption"><a href="https://mises-media.s3.amazonaws.com/styles/max_1160/s3/victor1.png?itok=w1rQlIdk" title="victor1.png" class="colorbox" data-colorbox-gallery="gallery-file-83743-trv2NJOEc9M" data-cbox-img-attrs="{"title": "", "alt": ""}"><img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/max_full/s3/victor1.png?itok=lfZERsGV" width="693" height="305" alt="victor1.png" title="" /></a></div>
<p><a href="http://www.oecd.org/economy/surveys/Italy-2019-OECD-economic-survey-overview.pdf">Source: OECD </a></p>
<p><a href="https://www.reuters.com/article/us-italy-banks-funding/italian-banks-face-2019-funding-crunch-without-ecb-help-idUSKCN1P928H">The Italian banks are already financially weak</a>, scuffling with refinancing their bond issues and huge debts. This has reduced their capacity to lend funds required to rejuvenate the flailing private sector in the country. Given the size of the Italian economy, to what extent the European Central Bank could intervene financially to help them recover is also doubtful. The economic issues in Italy have already posed major threats to the monetary targets of the European Central Bank. The crisis in Italy, if not contained, would shatter the market confidence in the entire Eurozone, putting the EU in big trouble.</p>
<h4><strong>Whom Should We Blame?</strong></h4>
<p>Undoubtedly, the political scenario in Italy made the crisis worse. The radical measures of the new populist government in Italy is threatening the autonomy of the Italian central bank, Banca d'Italia. The new government wants to take control of the sizeable gold reserves of the Italian Central Bank. “The gold is the property of the Italian people, not of anyone else,” said Matteo Salvini, the deputy prime minister and the leader of the League Party making clear what the government is up to — namely, devaluation. This was followed by the removal of the leadership of the Central Bank on the pretext of preventing a banking crisis in the country.</p>
<p>In 2018, the Italian government sought to raise its budget deficit blindly to 2.4 percent for the next three years. However, this proposal was not acceptable to the EU. The conflicts of interest between the government and the EU became visible from there. With a common currency in use, it is impossible for the Italian economists to think of a devaluation and might be now regretting their decision to switch from Lira to Euro. Nevertheless, it is not a good choice to go back to Lira at this moment as it would cause massive losses to the investors in whole Europe resulting in an unprecedented global economic crisis.</p>
<p>This instability persisting in the Euro Zone shows the failure of employing a common fiscal and monetary policy hand in hand which also questions the rationale of the concept of an Economic Union. In fact, the best performing economies are also threatened by the preposterous political and economic decisions taken by the leaders in the member countries.</p>
<p>The Italian crisis now posits a serious threat to the existence of the whole Euro Zone. Reconciling the ambitious Italian government to stay in line with the EU policies is a tussle which we are about to witness in the near future. However, the Italian economic crisis is just the tip of an iceberg. <a href="https://expertinvestoreurope.com/is-another-european-debt-crisis-around-the-corner/"> The debt issues in other European economies </a> including Portugal and Spain are also serious matters of concern. “The fundamentals in many European countries are still relatively weak. Spain is still running an excessive deficit, as is France” said Michael Leithead, head of fixed income at EFG Asset Management. Mario Draghi, the European Central Bank President mentioned in 2012 that the European Central Bank will do ”Whatever it takes” to save the Euro. It is a matter of time to see what it will cost for the EU to put a stop to this rapidly growing debt contagion.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/xIFAXwO0K-0" height="1" width="1" alt=""/>Vijay Victor<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/static-page/img/italy.PNG?itok=1pgdu1q6" width="240" alt="italy.PNG" />46576May 24, 2019 - 4:45 AMFront page feedno The European Union at present is undoubtedly at a crossroads. The economies which were once reckoned as strong pillars of the EU are now on the verge of an erosion. Economists had given several warnings on the soaring debt issues in many EU economies folVijay Victor The European Union at present is undoubtedly at a crossroads. The economies which were once reckoned as strong pillars of the EU are now on the verge of an erosion. Economists had given several warnings on the soaring debt issues in many EU economies following the financial crisis in 2008. The EU's nightmare began with the economic breakdown of Greece in 2015. Although Merkel’s Machiavellian plan of austerity measures avoided the impending Grexit, they couldn’t do anything to hinder the inevitable Brexit. One after another, threads are being knitted to this thriller, making the screenplay more complex to handle for the directors in Brussels. The country which is going to get featured next is none other than Italy. The third largest economy in the Eurozone is now a sinking ship. Latest statistics reveals that the current debt of Italy is around 130 percent of the total GDP which is nearly 2.6 trillion dollars, almost same as the size of the Indian economy in nominal GDP terms. The Italian economy is 10 times bigger than that of Greece, further alluding the intensity of this economic crisis. John Higgins and Adam Hoyes, economists at Capital Economics mentioned in a research note that "Unlike Italy's, Greece's debt-to-GDP ratio is on a downward trajectory and its debt has been restructured under far more favorable terms than Italy's. What's more, Italy's debt is much larger in absolute terms and poses a much bigger systemic risk for the euro-zone as a whole”. Looking at the long term growth prospects, the statistics show a shocking result that Italy’s GDP per capita remains stagnant at the same level as 18 years ago. Source: OECD The Italian banks are already financially weak, scuffling with refinancing their bond issues and huge debts. This has reduced their capacity to lend funds required to rejuvenate the flailing private sector in the country. Given the size of the Italian economy, to what extent the European Central Bank could intervene financially to help them recover is also doubtful. The economic issues in Italy have already posed major threats to the monetary targets of the European Central Bank. The crisis in Italy, if not contained, would shatter the market confidence in the entire Eurozone, putting the EU in big trouble. Whom Should We Blame? Undoubtedly, the political scenario in Italy made the crisis worse. The radical measures of the new populist government in Italy is threatening the autonomy of the Italian central bank, Banca d'Italia. The new government wants to take control of the sizeable gold reserves of the Italian Central Bank. “The gold is the property of the Italian people, not of anyone else,” said Matteo Salvini, the deputy prime minister and the leader of the League Party making clear what the government is up to — namely, devaluation. This was followed by the removal of the leadership of the Central Bank on the pretext of preventing a banking crisis in the country. In 2018, the Italian government sought to raise its budget deficit blindly to 2.4 percent for the next three years. However, this proposal was not acceptable to the EU. The conflicts of interest between the government and the EU became visible from there. With a common currency in use, it is impossible for the Italian economists to think of a devaluation and might be now regretting their decision to switch from Lira to Euro. Nevertheless, it is not a good choice to go back to Lira at this moment as it would cause massive losses to the investors in whole Europe resulting in an unprecedented global economic crisis. This instability persisting in the Euro Zone shows the failure of employing a common fiscal and monetary policy hand in hand which also questions the rationale of the concept of an Economic Union. In fact, the best performing economies are also threatened by the preposterous political and economic decisions taken by the leaders in the member countries. The Italian crisis now posits a serious threat to the existence of the whole EAustrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46576Envy, Inc.http://feedproxy.google.com/~r/MisesMedia/~3/7P4CfYy_7yc/46563
<p>Why do so many people resent capitalism, even when they benefit enormously from it?</p>
<p>Ludwig von Mises explained so much of what still plagues us today in his underrated classic <em><a href="http://Mises.org/AntiCap" target="_blank">The Anti-Capitalistic Mentality</a></em>.</p>
<p>Original Article: <a href="https://mises.org/wire/envy-inc" target="_blank">"Envy, Inc."</a></p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/7P4CfYy_7yc" height="1" width="1" alt=""/>Jeff Deist<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/static-page/img/AudioMisesWire_750x516_20180223.jpg?itok=5JRlqpkV" width="240" alt="Audio Mises Wire" title="Audio Mises Wire" />46563May 23, 2019 - 3:30 PMFront page feedno Why do so many people resent capitalism, even when they benefit enormously from it? Ludwig von Mises explained so much of what still plagues us today in his underrated classic The Anti-Capitalistic Mentality. Original Article: "Envy, Inc." Jeff Deist Why do so many people resent capitalism, even when they benefit enormously from it? Ludwig von Mises explained so much of what still plagues us today in his underrated classic The Anti-Capitalistic Mentality. Original Article: "Envy, Inc." Austrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46563Elizabeth Warren Shows Us Why Government Must Get Out of the Student Loan Businesshttp://feedproxy.google.com/~r/MisesMedia/~3/-sk3ip0Yv1A/46560
Under Warren's plan for higher education, Warren won’t make you go to college — but she’ll make you pay for it.<p>Original Article: <a href="https://mises.org/wire/elizabeth-warren-shows-us-why-government-must-get-out-student-loan-business" target="_blank">"Elizabeth Warren Shows Us Why Government Must Get Out of the Student Loan Business"</a>.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/-sk3ip0Yv1A" height="1" width="1" alt=""/>Chris Calton<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/static-page/img/AudioMisesWire_750x516_20180223.jpg?itok=5JRlqpkV" width="240" alt="Audio Mises Wire" title="Audio Mises Wire" />46560May 23, 2019 - 3:00 PMFront page feednoUnder Warren's plan for higher education, Warren won’t make you go to college — but she’ll make you pay for it. Original Article: "Elizabeth Warren Shows Us Why Government Must Get Out of the Student Loan Business". Chris CaltonUnder Warren's plan for higher education, Warren won’t make you go to college — but she’ll make you pay for it. Original Article: "Elizabeth Warren Shows Us Why Government Must Get Out of the Student Loan Business". Austrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46560Can 12th-Century Medicine Save 21st-Century Health Care?http://feedproxy.google.com/~r/MisesMedia/~3/lAzb9G9iIJ4/46559
<p>Is the body a machine? Are doctors mere technicians who simply “fix” biological defects in their patients? In a very real sense, that’s how modern societies conceive of medical practice, so much so that healthcare is now frequently experienced as an industrial process: doctors and nurses churning patients through an assembly line. And that process is taking a huge economic, physical, and mental toll on everyone.</p>
<p>The mechanical model on which modern medicine is based has obviously brought technological wonders to the practice of medicine—and it should be celebrated for these extraordinary achievements. But have we become so wedded to the machine metaphor that we ignore more fundamental aspects of human reality? Can another way of conceiving of health and life be brought to bear on the practice of medicine positively, without discarding the achievements of the scientific age?</p>
<p>Our guest is <a href="https://www.victoriasweet.com/" target="_blank">Dr. Victoria Sweet</a>, author of the best-sellers <a href="https://www.amazon.com/Gods-Hotel-Hospital-Pilgrimage-Medicine/dp/1594486549?tag=misesinsti-20"><em>God’s Hotel</em></a> and <a href="https://www.amazon.com/gp/product/1594633592?tag=misesinsti-20" target="_blank"><em>Slow Medicine</em></a>, two of the most important books on medicine in recent times. Those books were inspired by Dr. Sweet’s rediscovery of the medical texts of Hildegard of Bingen, a 12th-century mystic and nun whose practical approach to medicine may well contain the very principles that can help cure 21st-century health care from its seemingly irremediable predicament.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/lAzb9G9iIJ4" height="1" width="1" alt=""/>Michel Accad, Anish Koka<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/static-page/img/TheAccad%26KokaReport_750x516_v2_20181129.png?itok=0dtLpSdh" width="240" alt="The Accad & Koka Report" title="The Accad & Koka Report" />46559May 23, 2019 - 2:00 PMFront page feedno Is the body a machine? Are doctors mere technicians who simply “fix” biological defects in their patients? In a very real sense, that’s how modern societies conceive of medical practice, so much so that healthcare is now frequently experienced as an induMichel Accad, Anish Koka Is the body a machine? Are doctors mere technicians who simply “fix” biological defects in their patients? In a very real sense, that’s how modern societies conceive of medical practice, so much so that healthcare is now frequently experienced as an industrial process: doctors and nurses churning patients through an assembly line. And that process is taking a huge economic, physical, and mental toll on everyone. The mechanical model on which modern medicine is based has obviously brought technological wonders to the practice of medicine—and it should be celebrated for these extraordinary achievements. But have we become so wedded to the machine metaphor that we ignore more fundamental aspects of human reality? Can another way of conceiving of health and life be brought to bear on the practice of medicine positively, without discarding the achievements of the scientific age? Our guest is Dr. Victoria Sweet, author of the best-sellers God’s Hotel and Slow Medicine, two of the most important books on medicine in recent times. Those books were inspired by Dr. Sweet’s rediscovery of the medical texts of Hildegard of Bingen, a 12th-century mystic and nun whose practical approach to medicine may well contain the very principles that can help cure 21st-century health care from its seemingly irremediable predicament. Austrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46559Government-Created Monopolies Are Everywherehttp://feedproxy.google.com/~r/MisesMedia/~3/STT47t7dWuw/46539
<p>Ludwig von Mises and other free market economists have argued correctly that monopoly results from government intervention. However, they have largely ignored the prevalence of <a href="https://books.google.com/books?id=F-1iDgAAQBAJ&pg=PT89&lpg=PT89&dq=a+monopoly+exists+%E2%80%9Cwhen+a+specific+individual+or+enterprise+has+sufficient+control+over+a+particular+product+or+service+to+determine+significantly+the+terms+on+which+other+individuals+shall+have+access+to+it.%22&source=bl&ots=oQf5FCWA1k&sig=ACfU3U1QKQ_tGIVUM3VGw9_lGV5JyhNJtQ&hl=en&sa=X&ved=2ahUKEwjp9Zv4q8PhAhVCX60KHXbSDjsQ6AEwA3oECAcQAQ#v=onepage&q=a%20monopoly%20exists%20%E2%80%9Cwhen%20a%20specific%20individual%20or%20enterprise%20has%20sufficient%20control%20over%20a%20particular%20product%20or%20service%20to%20determine%20significantly%20the%20terms%20on%20which%20other%20individuals%20shall%20have%20access%20to%20it.%22&f=false"> monopolies </a> (including oligopolies). Throughout American history, politicians have incessantly awarded preferential policies (e.g., “corporate welfare”) to special interests that has allowed them to create monopolies dominating virtually every major market.</p>
<p>Pro-regulation economists have falsely blamed markets for creating monopolies. But their view has been common, perhaps because they have better recognized the pervasiveness of monopolies. Monopolies have created wealth disparity by: increasing incomes and profits for certain politically-favored groups while blocking opportunities for other businesses; decreasing wages by reducing the competition for workers; and especially increasing prices on consumers and others.</p>
<p>Politicians have doomed <a href="https://www.merriam-webster.com/dictionary/capitalism"> capitalism</a> by imposing monopolies within so many major markets. The impositions have actually led to perverse forms of <a href="https://www.britannica.com/topic/authoritarianism"> authoritarian </a> economies: mercantilism until the 1890s, then socialism until the 1970s and corporatism since.</p>
<h4>Mercantilism</h4>
<p><a href="https://www.britannica.com/topic/mercantilism">Mercantilism</a> involved a strong federal government regulating markets through favored monopolies, especially in banking, manufacturing and transportation. Government sought to maximize domestic production, profits and trade surpluses, without concern for wealth disparity.</p>
<p>During the Colonial period in the 16th century, Britain formed the first large-scale mercantilist economy. Meanwhile, the British Empire established colonies, including in America. By the 1660s, they were imposing mercantilism on their colonies, as captive markets. Merchants based in England were granted monopolies through preferential <a href="https://courses.lumenlearning.com/boundless-ushistory/chapter/english-administration-of-the-colonies/"> regulations, subsidies and trade barriers</a>. Rich Englishmen received <a href="http://www.frontiermuseum.org/exhibits/1600s-england/"> land grants </a> to establish plantations in America’s south and monopolize export agriculture. The <a href="https://www.britannica.com/topic/Bank-of-England"> Bank of England </a> monopoly was established to finance mercantilism including war. In 1776, Scottish economist Adam Smith published “The Wealth of Nations” which extolled the virtues of free markets and free trade. However, Smith also started a tradition among economists of <a href="http://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?article=1031&context=occasional_papers"> ignoring </a> monopolies. Wealth disparity caused by monopolies helped lead to America’s Revolutionary War against Britain from 1776 to 1783.</p>
<p>During the Federalist era from 1789 to the 1820s, America had been considered to be adopting capitalism even while the Federalist Party created monopolies similar to those of British mercantilism. The Federalists, led by first President George Washington’s treasurer Alexander Hamilton, advocated for a strong federal government that promoted economic growth through monopolies manufacturing machinery in the northeast, especially for sale to the agricultural industry in the south. Monopolies were awarded through preferential policies, including <a href="https://www.dailykos.com/stories/2008/11/17/662197/-"> patents, import tariffs, subsidies and loans</a>. The loans were provided by the First Bank of the United States, a banking monopoly established in 1791. The third President, Thomas Jefferson of the Democratic-Republican Party, led the belief that freedom from monopolies is a fundamental human right, and that the “monopoly of a single bank is certainly an evil.” He was influenced by European classical economists, like Smith, since there were few American economists before 1900. However, Jefferson, like Smith, lacked the courage of his convictions and wealth disparity was pervasive.</p>
<p>During the misnamed Free Banking era from the 1830s until the 1860s, European classical economists gained political influence, especially under Democratic President Andrew Jackson. However, the mercantilists retained significant clout. After Jackson dismantled the Second National Bank in 1836, the states <a href="https://mises-media.s3.amazonaws.com/Free%20Banking%20Theory%2C%20History%2C%20and%20a%20Laissez-Faire%20Model_2.pdf"> chartered </a> banks with continued monopolization and cronyism from 1837 to 1864. Jackson compromised by starting a period of declining import <a href="https://courses.lumenlearning.com/suny-ushistory1os2xmaster/chapter/the-nullification-crisis-and-the-bank-war/"> tariffs</a>, but the South opposed even those tariffs favoring domestic northern manufacturers. Jackson also opposed federal <a href="https://fee.org/articles/throttling-the-railroads-2-aiding-the-railroads-1830-1871/"> subsidies </a> for railroads, but state and local governments assumed they were needed for development and provided them to favored railroad monopolies. During the 1840s, socialist economist Karl Marx falsely blamed capitalism for monopolies and wealth disparity. In the late 1850s, the mercantilists, led by economist Henry Charles Carey of the mis-named American School of capitalism, led the restoration of high import tariffs (that helped lead to the Civil War). In the early 1860s, the mercantilists, led by Republican President Abraham Lincoln, re-chartered national banks and created transcontinental railroad monopolies with federal subsidies.</p>
<p>The Gilded Age of capitalism — from the 1870s until about 1900 — was known for rapid growth tarnished by wealth disparity. It was mis-characterized as capitalism because European neoclassical economists dominated economic thought. However, the majority Republican Party sold the country on the need to continue the mercantile monopolies of banking, manufacturing and the railroads. The material needs of the railroads, and the need to ship the materials, helped create other big industries that became monopolized through cronyism with the government-established railroad monopolies. Because the railroad monopolies were provided subsidies that were discontinued, competitors were unable to find or build competing railroads. New America’s Barry Lynn claims: “The most famous monopolies of that era were John D. Rockefeller’s Standard Oil and Andrew Carnegie’s steel company ….. were <a href="https://openmarketsinstitute.org/op-eds-and-articles/an-interview-barry-lynn-salon/"> leveraged off </a> the railroad monopolies.” Other emerging industries were monopolized by <a href="https://mises.org/library/myth-natural-monopoly">patents</a>, including the telephone until 1893, auto until 1903, electricity until the early 1900s and aluminum until 1909. Communist leader Vladimir Lenin calculated the growth in the numbers of large companies to provide evidence for the Marxist theory still used today that falsely blames capitalism for monopolies and wealth disparity.</p>
<h4>The Turn to Near-Socialism</h4>
<p><a href="https://www.britannica.com/topic/socialism">Socialism</a> involved an even stronger central government that used nationalization to create public-sector monopolies and tight regulation of privately-owned monopolies that were created with preferential government policies. Antitrust enforcement was used to break up some monopolies, but accomplished little. Monopoly profits were taxed for redistribution to the public, which reduced wealth disparity at the expense of economic growth.</p>
<p>During the Progressive era from the 1890s to the 1920s, politicians led by Republican President Theodore Roosevelt and Democrat President Woodrow Wilson incited public fears about capitalism leading to monopolies to garner support for creating many of today’s government-regulated monopolies. The new monopolies were awarded preferential policies including: Federal Reserve (Fed) <a href="https://www.federalreservehistory.org/essays/jekyll_island_conference"> favoritism </a> for big banks, <a href="https://www.jstor.org/stable/3113603?seq=1#page_scan_tab_contents"> quotas </a> for oil and gas producers, <a href="https://www.amazon.com/Slavery-Another-Name-Re-Enslavement-Americans/dp/1531885330"> prison labor </a> for U.S. Steel, import <a href="https://books.google.com/books?id=Zi03AgAAQBAJ&pg=PA301&lpg=PA301&dq=After+1909,+Alcoa+was+protected+from+foreign+competition+by+high+tariffs+on+imported+aluminum.+In+addition,+Alcoa+protected+its+monopoly+by+buying+up+many+of+the+low-cost+deposits+of+bauxite+(the+ore+containing+aluminum)+and+cheap+electric+power+sites+(aluminum+production+is+electricity-intensive).&source=bl&ots=34RmsUoTrA&sig=ACfU3U18cbVB5EFbSAmaUgT1-V-MNetqiA&hl=en&sa=X&ved=2ahUKEwimza_y88PhAhUKCawKHX6mDnUQ6AEwAHoECAkQAQ#v=onepage&q=After%201909%2C%20Alcoa%20was%20protected%20from%20foreign%20competition%20by%20high%20tariffs%20on%20imported%20aluminum.%20In%20addition%2C%20Alcoa%20protected%20its%20monopoly%20by%20buying%20up%20many%20of%20the%20low-cost%20deposits%20of%20bauxite%20(the%20ore%20containing%20aluminum)%20and%20cheap%20electric%20power%20sites%20(aluminum%20production%20is%20electricity-intensive).&f=false"> tariffs </a> for Aluminum Company of America, <a href="https://www.energy.gov/sites/prod/files/2017/02/f34/Appendix--Electricity%20System%20Overview.pdf"> exclusive territories </a> for electricity and natural gas utilities, <a href="https://mises.org/library/9-progressive-era">nationalization</a> of telephone and education, <a href="https://www.politico.com/story/2013/05/this-day-in-politics-091600"> cartel </a> of airlines, <a href="https://bigreddog.com/a-brief-history-of-zoning/">zoning</a> for real estate, legalized <a href="https://www.investopedia.com/terms/c/clayton-antitrust-act.asp"> unions </a> for labor, <a href="https://www.forbes.com/2009/08/25/american-medical-association-opinions-columnists-shikha-dalmia.html#4a2c924b42f2"> restrictive licensing </a> for medical professionals, and <a href="https://www.legendsofamerica.com/ah-patentmedicine/">patents</a> for pharmaceuticals. Fed manipulation of interest rates helped cause the depression of 1920-1 and Great Depression of 1929-39 (that helped lead to World War II). The depressions led to manufacturing monopolies by <a href="https://www.britannica.com/technology/automotive-industry"> bankrupting </a> many competitors, including those of the Big Three automakers. The 16th Amendment legalized the income tax. A few American socialist economists, like Thorstein Veblen, had a minor and mostly post-facto role in policymaking.</p>
<p>During the New Deal era from 1933 to 1945, Democratic President Franklin D. Roosevelt (FDR) led the nation the closest to socialism. He falsely blamed capitalism for the Great Depression while his Democrats strengthened government-institutionalized monopolies, and increased taxes and government spending. They created monopolies with <a href="https://www.ppcpdx.org/about/public-power-history/"> government takeovers </a> of electricity and gas utilities, home mortgages, telephone, air travel and automakers, and by restricting supply within <a href="https://www.jstor.org/stable/3569770?seq=1#page_scan_tab_contents"> cartels </a> formed in trucking, farming, oil, medicine and labor. FDR also supported the <a href="https://millercenter.org/president/fdroosevelt/foreign-affairs"> nationalization </a> of foreign oil industries. Finally, economists gained political influence behind pro-regulation economist John Maynard Keynes of Britain. However, even FDR admitted the depression only ended by “Winning-the-War.”</p>
<p>During the mis-characterized Golden Age of capitalism from 1950 until the 1970s, the U.S. enjoyed a post-war boom with low wealth disparity, aided by reduced regulation, especially lower import tariffs. However, trade surpluses resulted mainly because every other major economy had been severely damaged during World War II. The Big Three automakers were favored over domestic competition by government-sanctioned <a href="https://cei.org/2013/07/29/empire-of-rust-how-the-uaw-killed-detroit"> unions </a> and the Securities and Exchange Commission (<a href="https://www.weeklystandard.com/walter-vatter/wouldnt-you-really-rather-have-a-tucker">SEC</a>). Starting in 1965, the U.S. government caused skyrocketing medical cost inflation and federal deficits by increasing health care demand with the passage of the subsidized Medicare and Medicaid buyer monopolies while <a href="https://mises.org/wire/how-government-regulations-made-healthcare-so-expensive"> restricting the supply </a> of doctors and later hospitals. Most economists theorized that increased supply couldn’t force the medical monopolies to compete, but Frank Sloan, a Vanderbilt University health care economist, found no evidence to support their theories.</p>
<h4>Corporatism</h4>
<p><a href="https://www.britannica.com/topic/corporatism">Corporatism</a> has controlled markets through political partnerships with mostly privately-owned monopolies created by preferential government policies. Corporatism increased wealth disparity again and appears to be leading to fascism, a far-right form of corporatism and nationalism led by a strong leader promising to end the cronyism.</p>
<p>During the Deregulation era from about 1978 to 2000, Republican President Ronald Reagan, along with Democratic Presidents Jimmy Carter and Bill Clinton, promoted capitalism but actually paved the way for corporatism. Nobel Prize winning free market economist George Stigler of the Chicago school said: "most important enduring monopolies or near monopolies in the United States rest on <a href="https://www.econlib.org/library/Enc/Monopoly.html"> government policies</a>.” Stigler's theory of “<a href="https://www.investopedia.com/terms/r/regulatory-capture.asp">regulatory capture</a>” explained that governments regulate at the behest of producers who control regulation to thwart competition. But economists mostly ignored “<a href="https://promarket.org/rethinking-stiglers-theory-regulation-regulatory-capture-deregulatory-capture/">deregulatory capture</a>” as politicians allowed regulated monopolies to write the deregulation rules. Partially deregulated monopolies retained preferential regulations including: <a href="https://www.gao.gov/products/RCED-97-4">airport favoritism</a> for airlines, <a href="https://www.investopedia.com/articles/economics/chrysler-bailout.asp"> bailout </a> for an automaker, <a href="htthttp://www.wsj.com/articles/SB1032141100214262955%20/"> control over transmission lines </a> for electricity, natural gas and telecommunication utilities, <a href="https://thehill.com/blogs/congress-blog/economy-budget/309575-how-agriculture-subsidies-are-hurting-farmers-taxpayers"> subsidies </a> favoring traditional farm crops and higher education, laws encouraging <a href="https://openmarketsinstitute.org/explainer/health-insurance-and-monopoly/"> buyer monopolies </a> for health care, overly-generous <a href="https://www.bloomberg.com/news/features/2019-02-07/seven-fixes-for-american-capitalism"> intellectual property protections </a> for pharmaceuticals and technology, and <a href="https://www.inc.com/constantine-von-hoffman/how-the-fed-lied-about-loans-to-big-banks_1.html"> Fed favoritism </a> for big banks.</p>
<p>Through it all, politicians have rationalized the need for government interventions, including those that have created monopolies, by blaming <a href="https://www.investopedia.com/terms/m/marketfailure.asp"> market failure</a>. But politicians must impartially analyze whether market failures have actually existed and, if so, formulate policies that can increase efficiencies without creating monopolies.</p>
<p><em>This article is adapted from a draft </em> <em> <a href="https://www.aamonopolies.com/report" target="_blank"> report </a> </em> <em> published by Americans Against Monopolies.</em></p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/STT47t7dWuw" height="1" width="1" alt=""/>Mike Holly<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/monopoly.PNG?itok=CQFaA3xC" width="240" alt="monopoly.PNG" />46539May 23, 2019 - 2:00 PMFront page feedno Ludwig von Mises and other free market economists have argued correctly that monopoly results from government intervention. However, they have largely ignored the prevalence of monopolies (including oligopolies). Throughout American history, politicians Mike Holly Ludwig von Mises and other free market economists have argued correctly that monopoly results from government intervention. However, they have largely ignored the prevalence of monopolies (including oligopolies). Throughout American history, politicians have incessantly awarded preferential policies (e.g., “corporate welfare”) to special interests that has allowed them to create monopolies dominating virtually every major market. Pro-regulation economists have falsely blamed markets for creating monopolies. But their view has been common, perhaps because they have better recognized the pervasiveness of monopolies. Monopolies have created wealth disparity by: increasing incomes and profits for certain politically-favored groups while blocking opportunities for other businesses; decreasing wages by reducing the competition for workers; and especially increasing prices on consumers and others. Politicians have doomed capitalism by imposing monopolies within so many major markets. The impositions have actually led to perverse forms of authoritarian economies: mercantilism until the 1890s, then socialism until the 1970s and corporatism since. Mercantilism Mercantilism involved a strong federal government regulating markets through favored monopolies, especially in banking, manufacturing and transportation. Government sought to maximize domestic production, profits and trade surpluses, without concern for wealth disparity. During the Colonial period in the 16th century, Britain formed the first large-scale mercantilist economy. Meanwhile, the British Empire established colonies, including in America. By the 1660s, they were imposing mercantilism on their colonies, as captive markets. Merchants based in England were granted monopolies through preferential regulations, subsidies and trade barriers. Rich Englishmen received land grants to establish plantations in America’s south and monopolize export agriculture. The Bank of England monopoly was established to finance mercantilism including war. In 1776, Scottish economist Adam Smith published “The Wealth of Nations” which extolled the virtues of free markets and free trade. However, Smith also started a tradition among economists of ignoring monopolies. Wealth disparity caused by monopolies helped lead to America’s Revolutionary War against Britain from 1776 to 1783. During the Federalist era from 1789 to the 1820s, America had been considered to be adopting capitalism even while the Federalist Party created monopolies similar to those of British mercantilism. The Federalists, led by first President George Washington’s treasurer Alexander Hamilton, advocated for a strong federal government that promoted economic growth through monopolies manufacturing machinery in the northeast, especially for sale to the agricultural industry in the south. Monopolies were awarded through preferential policies, including patents, import tariffs, subsidies and loans. The loans were provided by the First Bank of the United States, a banking monopoly established in 1791. The third President, Thomas Jefferson of the Democratic-Republican Party, led the belief that freedom from monopolies is a fundamental human right, and that the “monopoly of a single bank is certainly an evil.” He was influenced by European classical economists, like Smith, since there were few American economists before 1900. However, Jefferson, like Smith, lacked the courage of his convictions and wealth disparity was pervasive. During the misnamed Free Banking era from the 1830s until the 1860s, European classical economists gained political influence, especially under Democratic President Andrew Jackson. However, the mercantilists retained significant clout. After Jackson dismantled the Second National Bank in 1836, the states chartered banks with continued monopolization and cronyism from 1837 to 1864. Jackson compromised by starting a period of declining import tariffs, but the South opposed even those tariffs favoring domestic noAustrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46539Bitcoin, Gold, and the Battle for Sound Moneyhttp://feedproxy.google.com/~r/MisesMedia/~3/M-1ALVEa_Dg/46558
<p>Bitcoin is a shot across the bow at government’s monopoly control of money. While no one in the US appreciates the direction money is going, others are waking up.</p>
<p>Original Article: <a href="https://mises.org/wire/bitcoin-gold-and-battle-sound-money" target="_blank">"Bitcoin, Gold, and the Battle for Sound Money"</a>.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/M-1ALVEa_Dg" height="1" width="1" alt=""/>Doug French<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/static-page/img/AudioMisesWire_750x516_20180223.jpg?itok=5JRlqpkV" width="240" alt="Audio Mises Wire" title="Audio Mises Wire" />46558May 23, 2019 - 1:30 PMFront page feedno Bitcoin is a shot across the bow at government’s monopoly control of money. While no one in the US appreciates the direction money is going, others are waking up. Original Article: "Bitcoin, Gold, and the Battle for Sound Money". Doug French Bitcoin is a shot across the bow at government’s monopoly control of money. While no one in the US appreciates the direction money is going, others are waking up. Original Article: "Bitcoin, Gold, and the Battle for Sound Money". Austrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46558A "European Empire" Won't Make Europe Richerhttp://feedproxy.google.com/~r/MisesMedia/~3/Htr5R1W02sk/46526
<p>A certain nostalgic view of the Roman Empire has helped to push the idea the European Union is essential to the prosperity and success of Europe. But a closer look at the continent invalidates the link between prosperity and affiliation to Brussels' Europe. Among the richest European countries are the countries <em>outside</em> the Union. This is the case in Switzerland, Norway, Iceland and Liechtenstein.<br /><br />Nor is there a link between the wealth of a country and its membership in large political groups at the global level. In addition to the regions already mentioned, many places combine smallness and wealth, as shown by Singapore, Taiwan, South Korea and New Zealand.<br /><br />Unfortunately for the proponents of a political Europe, the historical rise of the European civilization also illustrates the opposite of the imperial narrative. The American historian David Landes recalled in 1998 that the fall of the Roman Empire was a happy event for the Old Continent. These affirmations support the work of the sociologist Jean Baechler, who, three decades earlier, wrote that the expansion of European trade was favored by the anarchy inherited from the feudal order.<br /><br />Coupled with the relative cultural unity forged by the Catholic Church, the feudal anarchy inaugurated by the Middle Ages liberated the economy and the spirit of enterprise. This specificity of the West explains what the British historian Eric Jones called "the miracle" or "the exceptionalism" of Europe. Unlike oriental and Asian tyrants capable of killing the creativity of an empire, European monarchs, by the smallness of their territories, knew some limits to their predation.<br /><br />It was therefore easier for the industrious Western classes to escape oppression by punishing bad governments through emigration. Consider the revocation of the Edict of Nantes under Louis XIV and the impoverishment of the Kingdom of France induced by the exodus of Protestants to more favorable havens like Switzerland, the Netherlands, or England.<br /><br />The absence of political unity allowed the continent to be ruled by many small, sovereign, and competing territorial divisions. From this competition was born a race for talent and capital, conducive to the diffusion of a certain political discipline. It was in these conditions that freedom, commerce, and science flourished.</p>
<div tabindex="0"><p>That Macron invokes the "Renaissance" in his election campaign to sell membership in this new Empire, shows his historical misunderstanding.</p></div>
<p>The Renaissance itself was born from the bowels of an Italy divided into a multitude of city-states. It is this division that the Scottish philosopher David Hume considered favorable to the progress of the arts and sciences.</p>
<p>Also in Italy, Shakespeare, in the Merchant of Venice, leads Antonio to recall that the prosperity of the city depends on the securities and freedoms granted to all traders. From Benjamin Constant to Montesquieu to Alexis de Tocqueville, many thinkers were convinced that these freedoms are more likely to be safeguarded in small states than in vast empires.</p>
<p>From this point of view, the European Union is a cartel of governments eager to resuscitate imperial ambitions foreign to the conditions of the rise of our civilization. Its authoritarian projects of political, regulatory and fiscal standardization are betrayals of the spirit of innovation that requires the highest degree of decentralization and possible institutional competition.</p>
<p>Finally, it is the intellectuals Nathan Rosenberg and Luther Earle Birdzell who best summarize the historical factors behind the blossoming of the West. In a book published in 1986, they write that the prosperity of a civilization implies the expansion of an open trade on a politically fragmented territory. Applied to our region, this prescription leads us to prefer the dream of a Europe with a hundred thousand Liechtensteins to the dystopia of a continent-spanning empire.</p>
<h6><em>[<a href="http://www.lefigaro.fr/vox/politique/en-finir-avec-la-dystopie-de-l-empire-europeen-20190521?fbclid=IwAR0sM-X5bwrhSgaVjwuHTmadg4wd8ZWGA7AHfzpiO72xJFf0YR3N774B0qw">Originally published in French for Le Figaro</a>.]</em></h6><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/Htr5R1W02sk" height="1" width="1" alt=""/>Ferghane Azihari<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/euro_2.PNG?itok=W2NwuQZ2" width="240" alt="euro_2.PNG" />46526May 23, 2019 - 11:00 AMFront page feedno A certain nostalgic view of the Roman Empire has helped to push the idea the European Union is essential to the prosperity and success of Europe. But a closer look at the continent invalidates the link between prosperity and affiliation to Brussels' EuroFerghane Azihari A certain nostalgic view of the Roman Empire has helped to push the idea the European Union is essential to the prosperity and success of Europe. But a closer look at the continent invalidates the link between prosperity and affiliation to Brussels' Europe. Among the richest European countries are the countries outside the Union. This is the case in Switzerland, Norway, Iceland and Liechtenstein. Nor is there a link between the wealth of a country and its membership in large political groups at the global level. In addition to the regions already mentioned, many places combine smallness and wealth, as shown by Singapore, Taiwan, South Korea and New Zealand. Unfortunately for the proponents of a political Europe, the historical rise of the European civilization also illustrates the opposite of the imperial narrative. The American historian David Landes recalled in 1998 that the fall of the Roman Empire was a happy event for the Old Continent. These affirmations support the work of the sociologist Jean Baechler, who, three decades earlier, wrote that the expansion of European trade was favored by the anarchy inherited from the feudal order. Coupled with the relative cultural unity forged by the Catholic Church, the feudal anarchy inaugurated by the Middle Ages liberated the economy and the spirit of enterprise. This specificity of the West explains what the British historian Eric Jones called "the miracle" or "the exceptionalism" of Europe. Unlike oriental and Asian tyrants capable of killing the creativity of an empire, European monarchs, by the smallness of their territories, knew some limits to their predation. It was therefore easier for the industrious Western classes to escape oppression by punishing bad governments through emigration. Consider the revocation of the Edict of Nantes under Louis XIV and the impoverishment of the Kingdom of France induced by the exodus of Protestants to more favorable havens like Switzerland, the Netherlands, or England. The absence of political unity allowed the continent to be ruled by many small, sovereign, and competing territorial divisions. From this competition was born a race for talent and capital, conducive to the diffusion of a certain political discipline. It was in these conditions that freedom, commerce, and science flourished. That Macron invokes the "Renaissance" in his election campaign to sell membership in this new Empire, shows his historical misunderstanding. The Renaissance itself was born from the bowels of an Italy divided into a multitude of city-states. It is this division that the Scottish philosopher David Hume considered favorable to the progress of the arts and sciences. Also in Italy, Shakespeare, in the Merchant of Venice, leads Antonio to recall that the prosperity of the city depends on the securities and freedoms granted to all traders. From Benjamin Constant to Montesquieu to Alexis de Tocqueville, many thinkers were convinced that these freedoms are more likely to be safeguarded in small states than in vast empires. From this point of view, the European Union is a cartel of governments eager to resuscitate imperial ambitions foreign to the conditions of the rise of our civilization. Its authoritarian projects of political, regulatory and fiscal standardization are betrayals of the spirit of innovation that requires the highest degree of decentralization and possible institutional competition. Finally, it is the intellectuals Nathan Rosenberg and Luther Earle Birdzell who best summarize the historical factors behind the blossoming of the West. In a book published in 1986, they write that the prosperity of a civilization implies the expansion of an open trade on a politically fragmented territory. Applied to our region, this prescription leads us to prefer the dream of a Europe with a hundred thousand Liechtensteins to the dystopia of a continent-spanning empire. [Originally published in French for Le Figaro.] Austrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46526The World Is Growing Tired of Government-Controlled Fiat Currencieshttp://feedproxy.google.com/~r/MisesMedia/~3/ufpgoviT9zQ/46525
<p><strong>Listen to <a href="https://mises.org/library/bitcoin-gold-and-battle-sound-money" target="_blank">the <em>Audio Mises Wire</em> version</a> of this article.</strong></p>
<p>Here in the U.S. the financial markets are focusing on Fed Chair Jerome Powell’s herky-jerky monetary messages while politically the news is Trump’s two picks for the central bank board have taken themselves out of the running. </p>
<p>Herman "9-9-9" Cain and Stephen Moore couldn’t take the heat and either withdrew their names from consideration, or their names where withdrawn via twitter. Both had plenty of baggage, but, what the two had in common was, in their pasts, mentions of returning to the gold standard. That is a no-no. Washington is full of #metoo offenders, but kooky #goldbugs are not allowed. </p>
<p>That kind of talk garners a bipartisan 86ing from serious contention.</p>
<p>Meanwhile, <a href="https://sputniknews.com/business/201904241074425080-russia-gold-purchase-fresh-figures/">Sputnik News</a> reports that Russia (Vlad and Elvira, Russia’s central bank head) continues to ditch dollars in favor of the ancient relic that Washington so despises. </p>
<blockquote><p>The new purchases continue a trend established at the start of the year, with Russia buying a whopping 31.1 tonnes in February, adding to 6.22 tonnes purchased a month earlier. Russia has now bought some 55.98 tonnes of gold in the first three months of 2019, putting it well on track to matching the average 200+ tonne purchase made annually over the past half-decade.</p></blockquote>
<p>One wonders what Mr. Putin and Ms. Nabiullina, are up to? By the way, Ms. Nabiullina is not just a pretty face, she was named the best <a href="https://www.rt.com/russia/372678-award-nabiullina-russia-inflation/">Central Bank Governor</a> in Europe in 2016 by the international financial magazine, The Banker, besting the likes of Mario Draghi. </p>
<p>Her gold buying makes me think she has read Saifedean Ammous’s <a href="https://smile.amazon.com/Bitcoin-Standard-Decentralized-Alternative-Central/dp/1119473861/ref=sr_1_1_sspa?crid=33KQC7AIIZUDB&keywords=bitcoin+standard&qid=1558467905&s=gateway&sprefix=bitcoin+standard%2Caps%2C147&sr=8-1-spons&psc=1"><em>The Bitcoin Standard: The Decentralized Alternative to Central Banking</em></a>. Don’t let the title fool you. This book is not the cover-to-cover crypto cheerleading/gold bashing other authors attempt to jam down our throats. Dr. Ammous Is actually a Professor of Economics, and none other than “Black Swan” author Nassim Taleb wrote the introduction.</p>
<p>Professor Ammous’s <em>Tour de Force</em> begins where it should; the origins of money, then monetary metals, the government takeover of money, time preference, Austrian business cycle theory, money and freedom, and finally digital money. For those wanting to know what the heck a Bitcoin is, it may seem like a long wait. Changes in money don’t happen overnight. All of your questions about Bitcoin are answered in Chapter 10. However, with a bibliography loaded with Hoppe, Higgs, Hazlett, Mises, Raico, and Rothbard, don’t skip ahead. </p>
<p>If one didn't know the title, a reader would swear Professor Ammous is making the case for a return to the gold standard: Not a phony Bretton Woods gold standard, but the real pre-WWI gold standard deal.</p>
<p>What makes gold such a great monetary metal is it’s high stock-to-flow ratio. The author explains all the gold ever mined, a thousand years worth, is still with us. So, gold’s price elasticity of supply is the lowest of any metal. However, with Satoshi Nakamoto’s protocol capping the number of Bitcoin at 21 million, it’s elasticity of supply is even lower.</p>
<p>Anyone who has held a one ounce gold coin knows that transporting any amount of the metal is cumbersome. Thus, paper receipts for the metal generally changed hands and the gold stayed put. Of course, the paper began to trade backed by less and less gold, and here we are. Since Nixon snipped the last thread tying the dollar to gold, the number of dollars has grown exponentially. The gold standard is great, except in the hands of untrustworthy governments, ie. any and all governments. </p>
<p>Satoshi, whoever he, she, or they may be, published the Bitcoin paper in 2009, a response to the 2008 financial crash. However, Professor Ammous, references a book by James Davidson and William Rees-Mogg entitled <em>The Sovereign Individual</em>. A book well known in libertarian circles. What Ammous points out is Davidson and Rees-Mogg foresaw Bitcoin technology 12 years prior to Satoshi’s work. They, Ammous writes, “predict with remarkable prescience the form that the new digital monetary escape hatch will take: cryptographically secured forms of money independent of all physical restrictions that cannot be stopped or confiscated by government authorities.” </p>
<p>Bitcoin is a shot across the bow at government’s monopoly control of money. While no one in the US appreciates the direction money is going, having the world’s reserve currency and all, Vladimir Putin and Elvira Nabiullina can see what Professor Ammous understands,</p>
<blockquote><p>If the modern world is ancient Rome, suffering the economic consequences of monetary collapse, with the dollar our aureus, then Satoshi Nakamoto is our Constantine, Bitcoin is his solidus, and the Internet is our Constantinople.</p></blockquote>
<p>“The current fiat money system that originates from 1973 may be replaced by digitalised commodity-based currencies in the future,” Marc Friedrich, a German economist and bestselling author, told <a href="https://sputniknews.com/analysis/201904101073970299-gold-commodities-currency/">Sputnik</a><strong>. </strong></p>
<p>The Bank of International Settlements will introduce a rule on January 1, 2022 allowing central banks to hold up to 20 per cent of their deposits in gold, silver, and even platinum in order to stabilize their balance sheets, according to Friedrich. </p>
<p><a href="https://www.bloomberg.com/news/articles/2019-05-02/central-bank-first-quarter-gold-buying-at-highest-since-2013">Bloomberg</a> reports central bank gold buying in the first quarter was the highest in six years led by China and Russia. Rupert Rowling writes,</p>
<blockquote><p>Global gold reserves rose 145.5 tons in the first quarter, a 68 percent increase from a year earlier, the World Gold Council said Thursday in a report. Russia remains the largest buyer as the nation reduces its U.S. Treasury holdings as part of a de-dollarization drive.</p></blockquote>
<p>Rowling continues,</p>
<blockquote><p>The buyers are dominated by countries looking to reduce their dollar dependency, and are typically nations with a lower share of reserves in gold than Western European countries.</p></blockquote>
<p>The battle is joined: Central Banks and the fiat reserve dollar hegemony won’t give up easy, even resorting to a return to precious metals to stave off the threat of individual monetary sovereignty, Bitcoin, and the digital revolution. </p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/ufpgoviT9zQ" height="1" width="1" alt=""/>Doug French<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/static-page/img/bitcoin%20gold%20cash.jpg?itok=PJP8PrIl" width="240" alt="bitcoin gold cash.jpg" />46525May 23, 2019 - 6:00 AMFront page feedno Listen to the Audio Mises Wire version of this article. Here in the U.S. the financial markets are focusing on Fed Chair Jerome Powell’s herky-jerky monetary messages while politically the news is Trump’s two picks for the central bank board have taken tDoug French Listen to the Audio Mises Wire version of this article. Here in the U.S. the financial markets are focusing on Fed Chair Jerome Powell’s herky-jerky monetary messages while politically the news is Trump’s two picks for the central bank board have taken themselves out of the running. Herman "9-9-9" Cain and Stephen Moore couldn’t take the heat and either withdrew their names from consideration, or their names where withdrawn via twitter. Both had plenty of baggage, but, what the two had in common was, in their pasts, mentions of returning to the gold standard. That is a no-no. Washington is full of #metoo offenders, but kooky #goldbugs are not allowed. That kind of talk garners a bipartisan 86ing from serious contention. Meanwhile, Sputnik News reports that Russia (Vlad and Elvira, Russia’s central bank head) continues to ditch dollars in favor of the ancient relic that Washington so despises. The new purchases continue a trend established at the start of the year, with Russia buying a whopping 31.1 tonnes in February, adding to 6.22 tonnes purchased a month earlier. Russia has now bought some 55.98 tonnes of gold in the first three months of 2019, putting it well on track to matching the average 200+ tonne purchase made annually over the past half-decade. One wonders what Mr. Putin and Ms. Nabiullina, are up to? By the way, Ms. Nabiullina is not just a pretty face, she was named the best Central Bank Governor in Europe in 2016 by the international financial magazine, The Banker, besting the likes of Mario Draghi. Her gold buying makes me think she has read Saifedean Ammous’s The Bitcoin Standard: The Decentralized Alternative to Central Banking. Don’t let the title fool you. This book is not the cover-to-cover crypto cheerleading/gold bashing other authors attempt to jam down our throats. Dr. Ammous Is actually a Professor of Economics, and none other than “Black Swan” author Nassim Taleb wrote the introduction. Professor Ammous’s Tour de Force begins where it should; the origins of money, then monetary metals, the government takeover of money, time preference, Austrian business cycle theory, money and freedom, and finally digital money. For those wanting to know what the heck a Bitcoin is, it may seem like a long wait. Changes in money don’t happen overnight. All of your questions about Bitcoin are answered in Chapter 10. However, with a bibliography loaded with Hoppe, Higgs, Hazlett, Mises, Raico, and Rothbard, don’t skip ahead. If one didn't know the title, a reader would swear Professor Ammous is making the case for a return to the gold standard: Not a phony Bretton Woods gold standard, but the real pre-WWI gold standard deal. What makes gold such a great monetary metal is it’s high stock-to-flow ratio. The author explains all the gold ever mined, a thousand years worth, is still with us. So, gold’s price elasticity of supply is the lowest of any metal. However, with Satoshi Nakamoto’s protocol capping the number of Bitcoin at 21 million, it’s elasticity of supply is even lower. Anyone who has held a one ounce gold coin knows that transporting any amount of the metal is cumbersome. Thus, paper receipts for the metal generally changed hands and the gold stayed put. Of course, the paper began to trade backed by less and less gold, and here we are. Since Nixon snipped the last thread tying the dollar to gold, the number of dollars has grown exponentially. The gold standard is great, except in the hands of untrustworthy governments, ie. any and all governments. Satoshi, whoever he, she, or they may be, published the Bitcoin paper in 2009, a response to the 2008 financial crash. However, Professor Ammous, references a book by James Davidson and William Rees-Mogg entitled The Sovereign Individual. A book well known in libertarian circles. What Ammous points out is Davidson and Rees-Mogg foresaw Bitcoin technology 12 years prior to Satoshi’s work. They, Ammous writes, “predict with remarkable presciencAustrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46525Envy, Inc.http://feedproxy.google.com/~r/MisesMedia/~3/1WdZD6lORO0/46531
<p><strong>Listen to <a href="https://mises.org/library/envy-inc" target="_blank">the <em>Audio Mises Wire</em> version</a> of this article.</strong></p>
<p>Presidential aspirant Kamala Harris promises to compel private companies with more than 100 employees to disclose what they pay employees to the Equal Opportunity Employment Commission. Companies that don't pay women "enough" will pay fines until they demonstrate an acceptable level of gender parity. South Bend, Indiana's "Mayor Pete" Buttigieg thinks America needs a federal "Equality Act" to make up for past racism, sexism, and homophobia. Senator Elizabeth Warren champions direct cash payments to black Americans as reparations for slavery. And all of the 2020 hopefuls take great pains to characterize income and wealth disparity as the defining issue of our time.</p>
<p>The ostensible thread connecting all of these public policy ideas is equality. Millions of Americans firmly believe the proper role of government is to make us more equal, and thereby make society more just. Old-fashioned liberal ideas about private property and natural rights barely register in this worldview. And it won't be changed by an election or politician; egalitarianism as an animating political, economic, and social principle is firmly entrenched across the West today. </p>
<p>Are these proposals rooted in justice, or hatred and envy? Are they presented as an appeal for restitutionary justice, however far-fetched and far-removed? Or do they represent a gross display of cynical politics, an appeal meant to divide? We hate to play amateur psychologist. But after more than a century of progressive claims of good intentions, the results speak for themselves: capitalism and markets increase freedom and prosperity, while political engineering is zero-sum and antagonistic. </p>
<p>Ludwig von Mises explained so much of what still plagues us today in his underrated classic <a href="https://Mises.org/AntiCap" target="_blank"><em>The Anti-Capitalistic Mentality</em></a>. Written in the early 1950s, toward the end of Mises's long career, this short book exhibits easier language and faster pace than his earlier works. Having been in the US for more than a decade at this point, one senses a change in Mises's written English. He's more comfortable in his diction and syntax, and utterly unconcerned with staying in his lane as an economist.</p>
<p>For Mises, capitalism is private property and markets. It is the engine of civilization, and the hallmark of any society with a natural and healthy "urge for economic betterment." It is the only way to organize society that comports with human nature, promotes peace and social cohesion, and advances material well-being.</p>
<p>So what accounts for its constant vilification? Capitalism's critics, no less self-interested than anyone else, must be explainable by their unease and dissatisfaction with life. And envy, no less than a biblical sin, is the source of that unease and dissatisfaction. So while Mises much earlier advanced the concept of "felt uneasiness" in his explanations of praxeology, he goes much further here into an outright examination of the psychological <em>source</em> of that uneasiness.</p>
<p>Why do intellectuals, particularly university professors, resent capitalism? Simple, Mises explains: they resent the higher incomes and prestige of the risk-taking, entrepreneurial widget makers they look down upon.</p>
<p>Why do working class voters resent capitalism? Capitalism provides freedom, Mises tells us, but also imposes responsibility for one's lot in life (a suggestion for which Jordan Peterson is deeply resented on the Left). A more successful sibling or neighbor serves as a reminder of one's failings, and every day presents an opportunity to advance or fall back. This is hardly comforting.</p>
<p>Why do literary and artistic elites, including Hollywood and Broadway, resent capitalism? The consuming public's taste is fickle and fleeting. The sensitive artist's work may go completely unappreciated by middlebrow mass audiences, and even the successful actor may become forgotten after a poorly received film or two.</p>
<p>Capitalism produces bad art? Who is to say, Mises asks, how the tired working class spend their leisure time and money? And with the plenitude capitalism provides, every taste is satisfied. Over time, particular genius like Shakespeare tends to emerge and prevail—albeit not always in time for wealth and fame in the artist's lifetime.</p>
<p>But doesn't capitalism result in other kinds of impoverishment, by making us less happy, more unequal, and crassly materialistic? Again, Mises unapologetically stands his ground: materialism is worthy of celebration; as today's luxuries are tomorrow's affordable middle class necessities. Inequality is meaningless until we grapple with scarcity, the starting point for any economic analysis. Capital accumulation is the only way to alleviate the scarcity that defines our natural world. Happiness is perhaps undefinable and un-measurable, but who among us should have the right to deny an automobile or refrigerator to satisfy a consumer's wish? Why do the anti-capitalists want to forbid the common man his "daily plebiscite"? </p>
<p>Of course Mises's account of the anti-capitalist mindset did not go unchallenged by critics. The infamous former Soviet spy Whittaker Chambers took to the pages of <em>National Review </em>for a denunciation of the book's "know-nothing conservatism." <em>The Economist </em>magazine (was it ever good?) <a href="https://www.webcitation.org/5fRAcAwrL">lambasted</a> Mises's "sad little book" and its caricature of liberalism by a debater of "Hyde Park standard."</p>
<p>But in the intervening 65 years, has Mises's identification of "envy, conceit, ignorance, and dishonesty" among western anti-capitalists proved correct? Did events in the second half of the 20th century, particularly the collapse of Soviet communism, tend to vindicate him? </p>
<p>Certain sentences like "Under capitalism...everybody's station in life depends on his own doing," and "Under capitalism, material success depends on the appreciation of a man's achievements on the part of the sovereign consumers" will strike some readers as depicting an overly rosy view of American meritocracy. But again, Mises's conception of capitalism is unfettered, not the mixed system of political patronage in the US then and now. His larger point stands: markets and property present the individual with opportunities never before known in human history, while state planning makes us all cogs in a wheel. </p>
<p>Ultimately, <em>The Anti-Capitalistic Mentality</em> is a defense of dynamic capitalism against the doctrines of both progressives and conservatives. The former would deny average people that most unique and cherished American opportunity, the chance for upward class mobility. The latter seek to protect their own status against the <em>nouveau riche </em>the market disruptors. Both seek to keep people in their place, whereas unbridled capitalism—warts and all—gives them hope with responsibility. </p>
<p>Mises understood this. Politicians should read him.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/1WdZD6lORO0" height="1" width="1" alt=""/>Jeff Deist<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/static-page/img/GettyImages-666360418.jpg?itok=p__4ZNWF" width="240" alt="GettyImages-666360418.jpg" />46531May 22, 2019 - 3:00 PMFront page feedno Listen to the Audio Mises Wire version of this article. Presidential aspirant Kamala Harris promises to compel private companies with more than 100 employees to disclose what they pay employees to the Equal Opportunity Employment Commission. Companies thJeff Deist Listen to the Audio Mises Wire version of this article. Presidential aspirant Kamala Harris promises to compel private companies with more than 100 employees to disclose what they pay employees to the Equal Opportunity Employment Commission. Companies that don't pay women "enough" will pay fines until they demonstrate an acceptable level of gender parity. South Bend, Indiana's "Mayor Pete" Buttigieg thinks America needs a federal "Equality Act" to make up for past racism, sexism, and homophobia. Senator Elizabeth Warren champions direct cash payments to black Americans as reparations for slavery. And all of the 2020 hopefuls take great pains to characterize income and wealth disparity as the defining issue of our time. The ostensible thread connecting all of these public policy ideas is equality. Millions of Americans firmly believe the proper role of government is to make us more equal, and thereby make society more just. Old-fashioned liberal ideas about private property and natural rights barely register in this worldview. And it won't be changed by an election or politician; egalitarianism as an animating political, economic, and social principle is firmly entrenched across the West today. Are these proposals rooted in justice, or hatred and envy? Are they presented as an appeal for restitutionary justice, however far-fetched and far-removed? Or do they represent a gross display of cynical politics, an appeal meant to divide? We hate to play amateur psychologist. But after more than a century of progressive claims of good intentions, the results speak for themselves: capitalism and markets increase freedom and prosperity, while political engineering is zero-sum and antagonistic. Ludwig von Mises explained so much of what still plagues us today in his underrated classic The Anti-Capitalistic Mentality. Written in the early 1950s, toward the end of Mises's long career, this short book exhibits easier language and faster pace than his earlier works. Having been in the US for more than a decade at this point, one senses a change in Mises's written English. He's more comfortable in his diction and syntax, and utterly unconcerned with staying in his lane as an economist. For Mises, capitalism is private property and markets. It is the engine of civilization, and the hallmark of any society with a natural and healthy "urge for economic betterment." It is the only way to organize society that comports with human nature, promotes peace and social cohesion, and advances material well-being. So what accounts for its constant vilification? Capitalism's critics, no less self-interested than anyone else, must be explainable by their unease and dissatisfaction with life. And envy, no less than a biblical sin, is the source of that unease and dissatisfaction. So while Mises much earlier advanced the concept of "felt uneasiness" in his explanations of praxeology, he goes much further here into an outright examination of the psychological source of that uneasiness. Why do intellectuals, particularly university professors, resent capitalism? Simple, Mises explains: they resent the higher incomes and prestige of the risk-taking, entrepreneurial widget makers they look down upon. Why do working class voters resent capitalism? Capitalism provides freedom, Mises tells us, but also imposes responsibility for one's lot in life (a suggestion for which Jordan Peterson is deeply resented on the Left). A more successful sibling or neighbor serves as a reminder of one's failings, and every day presents an opportunity to advance or fall back. This is hardly comforting. Why do literary and artistic elites, including Hollywood and Broadway, resent capitalism? The consuming public's taste is fickle and fleeting. The sensitive artist's work may go completely unappreciated by middlebrow mass audiences, and even the successful actor may become forgotten after a poorly received film or two. Capitalism produces bad art? Who is to say, Mises asks, how the tirAustrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46531Central Banks' Forecasts Are Basically Garbagehttp://feedproxy.google.com/~r/MisesMedia/~3/6eZWKvDL4S0/46530
<p>Animals are a curious topic in finance, and we find them all over the place. We describe upward, downward or side-ways moving markets as bull, bear or deer markets. We have investment strategies ( <a href="https://www.investopedia.com/terms/d/dogsofthedow.asp">"Dogs of the Dow"</a>) and trading behavior ( <a href="https://en.wikipedia.org/wiki/Dead_cat_bounce"> 'dead cat bouncing </a> ') named after pets. We have <a href="https://morningstar.in/posts/29825/bulls-bears-and-animals-of-the-stock-market.aspx">"pigs" and "wolves" and "ostriches</a>" and Nassim Taleb’s <a href="https://www.investopedia.com/terms/b/blackswan.asp">"black swans," </a> all of which reflect this tendency to name stock market phenomena after wildlife.</p>
<p>Most people are also aware of central bank language wrapped in similarly zoological terms: hawks and doves refer to central bankers preferring higher and lower interest rates, respectively. In the rest of the economics profession, this animalistic naming trend has been associated with certain iconic graphs, most famously through <a href="https://mises.org/library/more-evidence-global-economic-inequality-decreasing"> Branko Milanovic's </a> <a href="https://www.vox.com/policy-and-politics/2018/2/2/16868838/elephant-graph-chart-global-inequality-economic-growth"> 'Elephant Graph </a> ' that aims to show how economic growth has been distributed among global income deciles.</p>
<p>Recently, another animal has been called up to serve: the Hedgehog. Over the last decade – or <a href="http://www.banxico.org.mx/publicaciones-y-prensa/documentos-de-investigacion-del-banco-de-mexico/%7BEE4A45C7-E325-B81D-1AC1-0C2D151B51D6%7D.pdf"> even longer </a> – central bankers have exaggerated their benign impacts on the economy and their forecasts have consistently misjudged its future path. The central bank projections of the most important variables for monetary policy – GDP growth, unemployment and the Fed’s favored inflation metric, the <a href="https://fred.stlouisfed.org/series/PCE">PCE</a> – have been rosier than reality later revealed, over and over and over again.</p>
<p>When graphed, as those projections occasionally are, the erroneous forecasts stick out from the observed reality like the spiky outer armor of hedgehogs. The projection errors of various central banks have thereby given rise to an entirely new derisive class of graphs – I give you the Hedgehog graphs of the Fed, The ECB and the Swedish Riksbank.</p>
<p><strong><em>The Federal Reserve</em></strong>:</p>
<p><a href="https://onlinelibrary.wiley.com/doi/full/10.1002/soej.12312">Gaeto & Mazumder’s (2019: p. 22) </a> recent survey of Fed officials’ public predictions show that</p>
<p>When we examine the forecast accuracy scores of the Fed chairs over time, we see that their mean forecast score has been declining over time from about 2 in 1997 (specifically correct forecasts within approximately 2 standard deviations) to about 1 in 2015 (generally correct predictions)</p>
<p><a href="https://seekingalpha.com/article/4083214-case-wrong-history-federal-reserves-projections">Fed projections </a> of GDP growth repeatedly overestimated the <a href="https://www.frbsf.org/economic-research/publications/economic-letter/2015/february/economic-growth-projections-optimism-federal-reserve/"> speed of the recovery </a> after the 2008 financial crisis, and the overly <a href="https://qz.com/1018721/the-us-federal-reserve-has-been-overoptimistic-about-gdp-growth-in-every-forecast-since-2007/"> rosy </a> trend in growth forecasts has continued:</p>
<div class="media media-element-container media-image_no_caption"><a href="https://mises-media.s3.amazonaws.com/styles/max_1160/s3/ook1.png?itok=7nXY2zVz" title="book1.png" class="colorbox" data-colorbox-gallery="gallery-file-83668-yTnT59RW67M" data-cbox-img-attrs="{"title": "", "alt": ""}"><img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/max_full/s3/ook1.png?itok=4VaqBzFo" width="420" height="280" alt="ook1.png" title="" /></a></div>
For <a href="https://blogs.uoregon.edu/timduyfedwatch/2019/02/"> inflation forecasts </a> , it seems, the hedgehog has turned its spikes sideways, much in contrast to the Riksbank and the ECB that we’ll see below: <div class="media media-element-container media-image_no_caption"><a href="https://mises-media.s3.amazonaws.com/styles/max_1160/s3/ook2.jpg?itok=Xob5aO9x" title="book2.jpg" class="colorbox" data-colorbox-gallery="gallery-file-83669-yTnT59RW67M" data-cbox-img-attrs="{"title": "", "alt": ""}"><img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/max_full/s3/ook2.jpg?itok=meBLIfQM" width="693" height="376" alt="ook2.jpg" title="" /></a></div>
<p>The bottom line in the literature that analyzes Fed prediction behavior seems to suggest that the quality and accuracy of their forecasts have both gotten worse <em>and</em> less specific.</p>
<p>Admittedly, Fed researchers (judged by <em> <a href="https://www.federalreserve.gov/monetarypolicy/timeline-summary-of-economic-projections.htm"> Summary of Economic Projections </a> </em> data, despite all <a href="https://www.brookings.edu/blog/ben-bernanke/2016/11/28/federal-reserve-economic-projections/"> their technical flaws) </a> are not the only ones whose projections are noticeably off. The <a href="https://www.philadelphiafed.org/research-and-data/real-time-center/survey-of-professional-forecasters/data-files/pce"> Survey of Professional Forecasters </a> , published by the Philadelphia Fed, show a much clearer hedgehog – one that systematically <em>over</em>estimates the Fed’s willingness to hike interest rates, up until the time of the first hike in 2015, at which point SPFs estimations have <em>under</em>estimated the speed of hikes:</p>
<div class="media media-element-container media-image_no_caption"><a href="https://mises-media.s3.amazonaws.com/styles/max_1160/s3/ook3.jpg?itok=RMImwMsD" title="book3.jpg" class="colorbox" data-colorbox-gallery="gallery-file-83670-yTnT59RW67M" data-cbox-img-attrs="{"title": "", "alt": ""}"><img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/max_full/s3/ook3.jpg?itok=ANZkS6sy" width="693" height="445" alt="ook3.jpg" title="" /></a></div>
<p>Regardless, it is remarkable how the forecasting errors are so uniformly wrong in one direction at a time. But they make for pretty hedgehogs.</p>
<p><strong><em>The Riksbank</em></strong></p>
<p>The <a href="https://cornucopia.cornubot.se/2016/07/riksbankens-nya-igelkott.html"> Riksbank’s projection </a> for where its future short-term interest rate will be has suffered from a similar upward bias for close to a decade:</p>
<div class="media media-element-container media-image_no_caption"><a href="https://mises-media.s3.amazonaws.com/styles/max_1160/s3/ook4.jpg?itok=ywLZlaJb" title="book4.jpg" class="colorbox" data-colorbox-gallery="gallery-file-83671-yTnT59RW67M" data-cbox-img-attrs="{"title": "", "alt": ""}"><img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/max_full/s3/ook4.jpg?itok=HrUeqr7g" width="693" height="415" alt="ook4.jpg" title="" /></a></div>
<p>Indeed, the Swedish <a href="https://www.avanza.se/placera/redaktionellt/2019/03/12/riksbanken-nytt-jobbigt-prognosfel.html"> financial </a> press has taken to ridicule the Riksbank for its excessively <a href="https://www.svd.se/risk-att-riksbankens-prognos-ar-for-optimistisk"> optimistic </a> projections, both regarding price inflation and its own future <a href="https://mikaelsyding.com/centralbanks/">interest rate</a>. Surveying <a href="https://www.konj.se/download/18.1c8910f9163148f0092a6912/1525422303944/Specialstudie_prognosj%C3%A4mf%C3%B6relse_maj%202018.pdf"> projections </a> made between 2013 and 2017 for 11 major Swedish institutions (the Riksbank, the 4 largest banks, 3 government departments, 2 major labor market organizations and a retail consultancy), Sweden’s <a href="https://www.konj.se/english/about-nier/forecasting-and-economic-analysis.html"> National Institute of Economic Research </a> showed that the Riksbank’s forecasting errors, ironically, are larger for inflation than for other variables. Relative to its forecasting peers, the Riksbank’s accuracy in forecasting GDP is much better than its ability to forecast inflation (the same <a href="https://www.money-rates.com/federal-reserve/accuracy-of-frb-decisions.htm"> seems true </a> for the Fed). And surprisingly, it is unbeaten in its forecasts for unemployment. Note, however, that the Riksbank does not have the Fed’s <a href="https://mises.org/wire/fed%E2%80%99s-quadral-mandate-and-impossible-balancing-act"> “dual mandate” </a> , and its sole task is to keep inflation at 2% – the very thing it is comparatively <em>worst</em> at forecasting.</p>
<p><strong><em>The ECB:</em></strong></p>
<p>The European central bank does not fare any better. According to <a href="http://bruegel.org/2018/12/ecbs-huge-forecasting-errors-undermine-credibility-of-current-forecasts/"> Zsolt Darvas </a> , senior fellow at the European think-tank Bruegel, the <a href="https://infogram.com/normalisation-fig1-1hmr6ggg381z6nl">ECB’s</a> “forecasts since [2013] have proven to be systematically incorrect”. Surveying the bank’s Eurozone inflation projections, we again find the optimistic forecasts making up the hedgehog graph’s spikes:</p>
<div class="media media-element-container media-image_no_caption"><a href="https://mises-media.s3.amazonaws.com/styles/max_1160/s3/ook5.jpg?itok=AjU6VehZ" title="book5.jpg" class="colorbox" data-colorbox-gallery="gallery-file-83672-yTnT59RW67M" data-cbox-img-attrs="{"title": "", "alt": ""}"><img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/max_full/s3/ook5.jpg?itok=vV3ip7If" width="693" height="540" alt="ook5.jpg" title="" /></a></div>
<p>Indeed, the ECB staffers’ overly optimistic view of inflation is strangely enough coupled with an overly <em>pessimistic</em> view when it comes to <a href="https://infogram.com/normalisation-fig2-1hmr6ggg38zo6nl"> unemployment </a> , where measured unemployment has continually fallen faster than projections for more than five years. Given a basic <a href="https://mises.org/wire/phillips-curve-myth">Phillips curve</a> assumption, this is of course inconsistent, <a href="http://bruegel.org/2018/12/ecbs-huge-forecasting-errors-undermine-credibility-of-current-forecasts/"> Darvas notes </a> :</p>
<div class="media media-element-container media-image_no_caption"><a href="https://mises-media.s3.amazonaws.com/styles/max_1160/s3/ook6.jpg?itok=Sc3xl0es" title="book6.jpg" class="colorbox" data-colorbox-gallery="gallery-file-83673-yTnT59RW67M" data-cbox-img-attrs="{"title": "", "alt": ""}"><img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/max_full/s3/ook6.jpg?itok=1nztbMbd" width="693" height="560" alt="ook6.jpg" title="" /></a></div>
<p>The tendency for many different central banks to systematically fail at forecasting does <a href="http://bruegel.org/2018/12/ecbs-huge-forecasting-errors-undermine-credibility-of-current-forecasts/"> call into question </a> their future credibility. Indeed, if every single forecast of the past decade has been utterly mistaken, what makes you think that your current forecasts ought to fare any better? And why should the rest of us pay you any attention?</p>
<p>If hedgehogging is unintentional, as <a href="https://mises.org/wire/fed-who-cried-growth"> Jonathan Newman observed on Mises.org </a> a few years ago, "their models are junk." If the tendency <em>is</em> intentional, they are just trying to project unwarranted optimism – which is indeed the suggested explanation among those who’ve <a href="https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&cad=rja&uact=8&ved=2ahUKEwi8s7bAtY7iAhXB0qYKHYQhCMUQFjABegQIAhAC&url=https%3A%2F%2Fwww.aeaweb.org%2Fconference%2F2018%2Fpreliminary%2Fpaper%2F2N2YYeB3&usg=AOvVaw0F_hBdC3-XhILeiDpcKrX4"> studied </a> the Fed’s <a href="http://graphics.wsj.com/fed-predictions/">forecasting</a> failures. There is <a href="https://www.frbsf.org/economic-research/publications/economic-letter/2019/april/does-fed-know-more-about-economic-forecasts/"> some evidence </a> that private sector actors revise up their growth forecasts when the Fed raises interest rates – concluding, effectively, that the Fed has superior non-public information about the (future) state of the economy. The hedgehog graphs would suggest otherwise.</p>
<p>Finally, a projection track record that consistently errs in the same direction could in principle be amended – adjusted downward or upward by the median of previous' forecasting errors. Indeed, that's what <a href="https://www.youtube.com/watch?v=-07DJ7xVBis"> successful forecasters do </a> . Why the three central banks here considered don’t update their consistently inaccurate “junk models” remains a puzzle.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/6eZWKvDL4S0" height="1" width="1" alt=""/>Joakim Book<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/dunce.PNG?itok=2KWeqBLq" width="240" alt="dunce.PNG" />46530May 22, 2019 - 11:00 AMFront page feedno Animals are a curious topic in finance, and we find them all over the place. We describe upward, downward or side-ways moving markets as bull, bear or deer markets. We have investment strategies ( "Dogs of the Dow") and trading behavior ( 'dead cat bouncJoakim Book Animals are a curious topic in finance, and we find them all over the place. We describe upward, downward or side-ways moving markets as bull, bear or deer markets. We have investment strategies ( "Dogs of the Dow") and trading behavior ( 'dead cat bouncing ') named after pets. We have "pigs" and "wolves" and "ostriches" and Nassim Taleb’s "black swans," all of which reflect this tendency to name stock market phenomena after wildlife. Most people are also aware of central bank language wrapped in similarly zoological terms: hawks and doves refer to central bankers preferring higher and lower interest rates, respectively. In the rest of the economics profession, this animalistic naming trend has been associated with certain iconic graphs, most famously through Branko Milanovic's 'Elephant Graph ' that aims to show how economic growth has been distributed among global income deciles. Recently, another animal has been called up to serve: the Hedgehog. Over the last decade – or even longer – central bankers have exaggerated their benign impacts on the economy and their forecasts have consistently misjudged its future path. The central bank projections of the most important variables for monetary policy – GDP growth, unemployment and the Fed’s favored inflation metric, the PCE – have been rosier than reality later revealed, over and over and over again. When graphed, as those projections occasionally are, the erroneous forecasts stick out from the observed reality like the spiky outer armor of hedgehogs. The projection errors of various central banks have thereby given rise to an entirely new derisive class of graphs – I give you the Hedgehog graphs of the Fed, The ECB and the Swedish Riksbank. The Federal Reserve: Gaeto & Mazumder’s (2019: p. 22) recent survey of Fed officials’ public predictions show that When we examine the forecast accuracy scores of the Fed chairs over time, we see that their mean forecast score has been declining over time from about 2 in 1997 (specifically correct forecasts within approximately 2 standard deviations) to about 1 in 2015 (generally correct predictions) Fed projections of GDP growth repeatedly overestimated the speed of the recovery after the 2008 financial crisis, and the overly rosy trend in growth forecasts has continued: For inflation forecasts , it seems, the hedgehog has turned its spikes sideways, much in contrast to the Riksbank and the ECB that we’ll see below: The bottom line in the literature that analyzes Fed prediction behavior seems to suggest that the quality and accuracy of their forecasts have both gotten worse and less specific. Admittedly, Fed researchers (judged by Summary of Economic Projections data, despite all their technical flaws) are not the only ones whose projections are noticeably off. The Survey of Professional Forecasters , published by the Philadelphia Fed, show a much clearer hedgehog – one that systematically overestimates the Fed’s willingness to hike interest rates, up until the time of the first hike in 2015, at which point SPFs estimations have underestimated the speed of hikes: Regardless, it is remarkable how the forecasting errors are so uniformly wrong in one direction at a time. But they make for pretty hedgehogs. The Riksbank The Riksbank’s projection for where its future short-term interest rate will be has suffered from a similar upward bias for close to a decade: Indeed, the Swedish financial press has taken to ridicule the Riksbank for its excessively optimistic projections, both regarding price inflation and its own future interest rate. Surveying projections made between 2013 and 2017 for 11 major Swedish institutions (the Riksbank, the 4 largest banks, 3 government departments, 2 major labor market organizations and a retail consultancy), Sweden’s National Institute of Economic Research showed that the Riksbank’s forecasting errors, ironically, are larger for inflation than for other variables. Relative to its forecasting peers, the RiksbankAustrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46530The Unseen Costs of "Medicare for All"http://feedproxy.google.com/~r/MisesMedia/~3/7OOZwi6LBG8/46532
<p>Many of the worst costs that will come with "Medicare for All" won't be calculated in dollars. They'll come in the form of doctor shortages, long wait times, and less access to care.</p>
<p>Original Article: <a href="https://mises.org/wire/unseen-costs-medicare-all" target="_blank">"The Unseen Costs of "Medicare for All""</a>.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/7OOZwi6LBG8" height="1" width="1" alt=""/>Bradley Thomas<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/static-page/img/AudioMisesWire_750x516_20180223.jpg?itok=5JRlqpkV" width="240" alt="Audio Mises Wire" title="Audio Mises Wire" />46532May 22, 2019 - 10:15 AMFront page feedno Many of the worst costs that will come with "Medicare for All" won't be calculated in dollars. They'll come in the form of doctor shortages, long wait times, and less access to care. Original Article: "The Unseen Costs of "Medicare for All"". Bradley Thomas Many of the worst costs that will come with "Medicare for All" won't be calculated in dollars. They'll come in the form of doctor shortages, long wait times, and less access to care. Original Article: "The Unseen Costs of "Medicare for All"". Austrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46532Money Supply Growth Inches up From March's 12-Year Lowhttp://feedproxy.google.com/~r/MisesMedia/~3/NABLPNfypf8/46542
<p>Money supply growth inched up in April, rising slightly above the March growth level, which was at a 12-year (145-month) low.</p>
<p>In April, year-over-year growth in the money supply was at 1.99 percent. That was up slightly from March's growth rate of 1.92 percent, but was well down from April 2018's rate of 4.32 percent.</p>
<div class="media media-element-container media-image_no_caption"><a href="https://mises-media.s3.amazonaws.com/styles/max_1160/s3/tms1_4.png?itok=nsjf0xHN" title="tms1.png" class="colorbox" data-colorbox-gallery="gallery-file-83684-trv2NJOEc9M" data-cbox-img-attrs="{"title": "", "alt": ""}"><img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/max_full/s3/tms1_4.png?itok=8QycrCsT" width="693" height="540" alt="tms1_4.png" title="" /></a></div>
<div><a href="https://mises-media.s3.amazonaws.com/styles/max_1160/s3/tms.PNG?itok=Og0SK9Ud" rel="noopener noreferrer" target="_blank" title="tms.PNG"> </a></div>
<p>The money-supply metric used here — <a href="https://mises.org/library/austrian-definitions-supply-money"> the "true" or Rothbard-Salerno money supply measure (TMS) </a> — is the metric developed by Murray Rothbard and Joseph Salerno, and is designed to provide a better measure of money supply fluctuations than M2. The Mises Institute now offers <a href="https://mises.org/austrian-school/money-supply"> regular updates </a> on this metric and its growth.</p>
<p>This measure of the money supply differs from M2 in that it includes treasury deposits at the Fed (and excludes short-time deposits, traveler's checks, and retail money funds).</p>
<p>M2 growth rose slightly April, growing 3.84 percent, compared to March's growth rate of 3.77 percent. M2 grew 3.72 percent in April of last year. The M2 growth rate has fallen considerably since late 2016, but has varied little in recent months.</p>
<p>Money supply growth can often be a helpful measure of economic activity. During periods of economic boom, money supply tends to grow quickly as banks make more loans. Recessions, on the other hand, tend to be preceded by periods of slow-downs in rates of money-supply growth.</p>
<p>Moreover, periods preceding recessions often show a growing gap between M2 growth and TMS growth. We saw this in 2006-7 and in 2000-1. The gap between M2 and TMS narrowed considerably from 2011 through 2015, but has grown in recent years.</p>
<div class="media media-element-container media-image_no_caption"><a href="https://mises-media.s3.amazonaws.com/styles/max_1160/s3/tms3_2.png?itok=nnTiL_-e" title="tms3.png" class="colorbox" data-colorbox-gallery="gallery-file-83689-trv2NJOEc9M" data-cbox-img-attrs="{"title": "", "alt": ""}"><img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/max_full/s3/tms3_2.png?itok=QnQa6wSs" width="693" height="500" alt="tms3_2.png" title="" /></a></div>
<p>The overall M2 total money supply in April was $14.6 trillion, and the TMS total was $13.4 trillion.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/NABLPNfypf8" height="1" width="1" alt=""/>Ryan McMaken<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/dollars_5.PNG?itok=15wN1oeX" width="240" alt="dollars_5.PNG" />46542May 22, 2019 - 10:00 AMFront page feedno Money supply growth inched up in April, rising slightly above the March growth level, which was at a 12-year (145-month) low. In April, year-over-year growth in the money supply was at 1.99 percent. That was up slightly from March's growth rate of 1.92 pRyan McMaken Money supply growth inched up in April, rising slightly above the March growth level, which was at a 12-year (145-month) low. In April, year-over-year growth in the money supply was at 1.99 percent. That was up slightly from March's growth rate of 1.92 percent, but was well down from April 2018's rate of 4.32 percent. The money-supply metric used here — the "true" or Rothbard-Salerno money supply measure (TMS) — is the metric developed by Murray Rothbard and Joseph Salerno, and is designed to provide a better measure of money supply fluctuations than M2. The Mises Institute now offers regular updates on this metric and its growth. This measure of the money supply differs from M2 in that it includes treasury deposits at the Fed (and excludes short-time deposits, traveler's checks, and retail money funds). M2 growth rose slightly April, growing 3.84 percent, compared to March's growth rate of 3.77 percent. M2 grew 3.72 percent in April of last year. The M2 growth rate has fallen considerably since late 2016, but has varied little in recent months. Money supply growth can often be a helpful measure of economic activity. During periods of economic boom, money supply tends to grow quickly as banks make more loans. Recessions, on the other hand, tend to be preceded by periods of slow-downs in rates of money-supply growth. Moreover, periods preceding recessions often show a growing gap between M2 growth and TMS growth. We saw this in 2006-7 and in 2000-1. The gap between M2 and TMS narrowed considerably from 2011 through 2015, but has grown in recent years. The overall M2 total money supply in April was $14.6 trillion, and the TMS total was $13.4 trillion. Austrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46542Tucker Carlson and AOC Are Wrong About Christianity and Usuryhttp://feedproxy.google.com/~r/MisesMedia/~3/e6CExQdVDE4/46529
<p>Alexandria Ocasio-Cortez thinks Christian theology supports her bill on excessive interest. Her position ignores the actual history of Christian views of usury.</p>
<p>Original Article: <a href="https://mises.org/wire/tucker-carlson-and-aoc-are-wrong-about-christianity-and-usury" target="_blank">"Tucker Carlson and AOC Are Wrong About Christianity and Usury"</a>.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/e6CExQdVDE4" height="1" width="1" alt=""/>Tyler Curtis<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/static-page/img/AudioMisesWire_750x516_20180223.jpg?itok=5JRlqpkV" width="240" alt="Audio Mises Wire" title="Audio Mises Wire" />46529May 22, 2019 - 9:45 AMFront page feedno Alexandria Ocasio-Cortez thinks Christian theology supports her bill on excessive interest. Her position ignores the actual history of Christian views of usury. Original Article: "Tucker Carlson and AOC Are Wrong About Christianity and Usury". Tyler Curtis Alexandria Ocasio-Cortez thinks Christian theology supports her bill on excessive interest. Her position ignores the actual history of Christian views of usury. Original Article: "Tucker Carlson and AOC Are Wrong About Christianity and Usury". Austrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46529Elizabeth Warren Shows Us Why Government Must Get Out of the Student Loan Businesshttp://feedproxy.google.com/~r/MisesMedia/~3/4PTG0v85Xns/46527
<p><strong>Listen to <a href="https://mises.org/library/elizabeth-warren-shows-us-why-government-must-get-out-student-loan-business">the <em>Audio Mises Wire</em> version</a> of this article.</strong></p>
<p>As candidates in the 2020 Democrat primary race try to outbid each other with grandiose promises to voters, the rising level of student loan debt makes for attractive campaign fodder. Making headlines with a plan aimed at addressing the student loan problem is Elizabeth Warren, whose loan forgiveness plan already enjoys the support of more than half the voting population, <a href="https://morningconsult.com/2019/05/08/voters-favor-elizabeth-warren-student-debt-loan-plan/"> even among those who do not have student loans </a> .</p>
<p>It’s no mystery why the policy is popular. With government-guaranteed access to loans, combined with a culture that inundates young people with the idea that success depends on a college degree—<em>any </em>college degree—there has been little restraint on borrowing, creating a cycle of rising tuition that necessitates ever-larger loans. Making the situation worse, the consequent increase in university education has effectively eliminated any potential financial return on non-STEM degrees. The problem has begun to reach a tipping point, <a href="https://www.forbes.com/sites/robertfarrington/2018/09/25/student-loan-defaulters-strategic-default/#63788e08229c"> with “strategic default” becoming a cultural norm </a> .</p>
<p>Libertarians and conservatives are more likely to politically oppose student loan forgiveness. Opposition generally comes from two angles: personal responsibility and economic freedom. On the first point, it is hard to deny the importance of taking responsibility for bad financial decisions, and learning to borrow wisely (or not at all) and repay debts is a vital part of functioning as an adult. Nobody is holding a gun to anybody’s head and forcing them to go to college.</p>
<p>But this does little to solve the very real problem of the millions of young people entering adulthood with $100,000 in debt and an unmarketable degree. And when our reaction to their situation essentially amounts to telling them that they should have had the wisdom to reject a lifetime of cultural and political indoctrination at an age when their brains had not yet fully developed, we shouldn’t be shocked to find them unreceptive to the message.</p>
<p>The matter of economic freedom relates both to the ethics and consequences of a government interceding on voluntarily contracted loans. If Congress gets into the business of wiping out personal debts, the ramifications of such a policy aren’t difficult to imagine. Borrowers are likely to take out larger and riskier loans, and creditors are unlikely to continue lending with the looming possibility of politicians erasing their balance sheet. Alternatively, if the State pays off the loans, the financial burden would in practice translate to borrowers simply paying debts indirectly with taxes high enough to both service the loan and fund whatever inefficient bureaucracy serves as the middle-man.</p>
<p>Less commonly acknowledged, though, is that the United States government currently owns virtually all of the $1.5 trillion in student loan debt. With the passage of the Affordable Care Act, the government effectively nationalized the student loan industry. Today, the government not only guarantees loans, but it also generates substantial revenues from payments. In fact, the profit that the government earns from the student loan industry <a href="https://www.brookings.edu/research/end-government-profits-on-student-loans-shift-risk-and-lower-interest-rates/"> is roughly double the average profit margin that private companies enjoy</a>.</p>
<p>In effect, student loans have been turned into another form of taxation. True, young people can still choose not to take out loans, but the perverse incentives attached to a nationalized student loan industry make it unlikely that the government is going to end its decades-long practice of indoctrinating elementary school children with why they simply <em>must</em> go to college. And the revenue provided by student loan payments, while negligible in the scope of the national budget, still funds some undoubtedly destructive policy or another.</p>
<p>Given this, we may almost be inclined to believe that Elizabeth Warren has accidentally adopted a libertarian position on student loans. There is no ethical dilemma with the government forgiving debts it owns—that issue only applies to the government forgiving the debt held by private creditors. And there’s always reason to laud reductions in government revenues in any form. At worst, student loan forgiveness fails to teach young people the value of financial responsibility. But even while people can be reckless with credit cards and auto loans, we can at least rest easy knowing that no other loan market has government guarantees compelling credit approval; markets have natural regulations deterring destructive lending (though fewer than would exist without expansionary monetary policy, but that’s a topic for another day).</p>
<p>So what’s the problem with Warren’s plan?</p>
<p>There may be a libertarian case for student loan forgiveness — at least for debts held by the State — but this argument comes with one giant asterisk that Warren and few other politicians would be willing to accept. The government <em>has</em> to get out of the student loan industry entirely. As long as the State continues to hold a monopoly on student lending—and especially while it continues to guarantee loan acceptance—loan forgiveness is merely a recipe for socialized higher education. This, unsurprisingly, is exactly what Warren wants.</p>
<p>Free college—which is really to say, taxpayer financed college—seems to face largely the same problems as the current system of nationalized student lending. Universities would still require funding, creating a tax burden that shouldered by the very people the policy seeks to help. It seems naive to assume that universal college education will see trends different from public schools, which have enjoyed <a href="https://fee.org/thinkecon/articles/the-problem-with-education-isn-t-spending/"> skyrocketing administrative costs with no accompanying gains in student performance </a> . And if young people are going to pay for it whether they go to school or not, bachelor’s degrees will predictably become even more common, and therefore worthless, than they already are.</p>
<p>The only functional difference between Warren’s proposal and the existing system is that currently, for all its moral problems and economic consequences, it is still an option to skip college and avoid the loans, and an increasing number of parents are giving their children this advice. The culture of sanctifying college degrees survives in public bureaucracies, but it’s dying a slow death among private citizens. If college becomes universal, this cultural change will be rendered meaningless. Warren won’t make you go to college, but she’ll still make you pay for it.</p>
<p>We should be sympathetic to the young people who were hoodwinked into entering adulthood with debt that averages a reasonable down payment on a house and a degree that lands them a job as a janitor. But this system, terrible as it is, is still preferable to reforms that would demand other young people to finance the bad decisions of their peers through taxation. Student loan forgiveness combined with universal college simply spreads the consequences of a broken higher education system to the few people smart enough to avoid it. Libertarians can make a case for the forgiveness of government-owned loans, but if forgiveness is couple with the complete privatization of the student loan industry—and that reform is unlikely to win Elizabeth Warren many votes.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/4PTG0v85Xns" height="1" width="1" alt=""/>Chris Calton<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/warren.PNG?itok=g2F9-UbQ" width="240" alt="warren.PNG" />46527May 22, 2019 - 6:00 AMFront page feedno Listen to the Audio Mises Wire version of this article. As candidates in the 2020 Democrat primary race try to outbid each other with grandiose promises to voters, the rising level of student loan debt makes for attractive campaign fodder. Making headlinChris Calton Listen to the Audio Mises Wire version of this article. As candidates in the 2020 Democrat primary race try to outbid each other with grandiose promises to voters, the rising level of student loan debt makes for attractive campaign fodder. Making headlines with a plan aimed at addressing the student loan problem is Elizabeth Warren, whose loan forgiveness plan already enjoys the support of more than half the voting population, even among those who do not have student loans . It’s no mystery why the policy is popular. With government-guaranteed access to loans, combined with a culture that inundates young people with the idea that success depends on a college degree—any college degree—there has been little restraint on borrowing, creating a cycle of rising tuition that necessitates ever-larger loans. Making the situation worse, the consequent increase in university education has effectively eliminated any potential financial return on non-STEM degrees. The problem has begun to reach a tipping point, with “strategic default” becoming a cultural norm . Libertarians and conservatives are more likely to politically oppose student loan forgiveness. Opposition generally comes from two angles: personal responsibility and economic freedom. On the first point, it is hard to deny the importance of taking responsibility for bad financial decisions, and learning to borrow wisely (or not at all) and repay debts is a vital part of functioning as an adult. Nobody is holding a gun to anybody’s head and forcing them to go to college. But this does little to solve the very real problem of the millions of young people entering adulthood with $100,000 in debt and an unmarketable degree. And when our reaction to their situation essentially amounts to telling them that they should have had the wisdom to reject a lifetime of cultural and political indoctrination at an age when their brains had not yet fully developed, we shouldn’t be shocked to find them unreceptive to the message. The matter of economic freedom relates both to the ethics and consequences of a government interceding on voluntarily contracted loans. If Congress gets into the business of wiping out personal debts, the ramifications of such a policy aren’t difficult to imagine. Borrowers are likely to take out larger and riskier loans, and creditors are unlikely to continue lending with the looming possibility of politicians erasing their balance sheet. Alternatively, if the State pays off the loans, the financial burden would in practice translate to borrowers simply paying debts indirectly with taxes high enough to both service the loan and fund whatever inefficient bureaucracy serves as the middle-man. Less commonly acknowledged, though, is that the United States government currently owns virtually all of the $1.5 trillion in student loan debt. With the passage of the Affordable Care Act, the government effectively nationalized the student loan industry. Today, the government not only guarantees loans, but it also generates substantial revenues from payments. In fact, the profit that the government earns from the student loan industry is roughly double the average profit margin that private companies enjoy. In effect, student loans have been turned into another form of taxation. True, young people can still choose not to take out loans, but the perverse incentives attached to a nationalized student loan industry make it unlikely that the government is going to end its decades-long practice of indoctrinating elementary school children with why they simply must go to college. And the revenue provided by student loan payments, while negligible in the scope of the national budget, still funds some undoubtedly destructive policy or another. Given this, we may almost be inclined to believe that Elizabeth Warren has accidentally adopted a libertarian position on student loans. There is no ethical dilemma with the government forgiving debts it owns—that issue only applies to the government Austrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46527Why Turkey's Debt Crisis is a Bigger Risk to the Eurozone than the PIGShttp://feedproxy.google.com/~r/MisesMedia/~3/Mxk4GZ36WDY/46405
<p>Turkey has been almost constantly in the news over the past year, as troubling headlines about its economy and political situation continue to pile up. In a currency meltdown that escalated last summer, the Turkish lira has plunged by nearly 40%, threatening the Turkish economy as a whole. In January, inflation topped 20%, with skyrocketing food prices having an especially severe impact on the population. At the same time, unemployment hit 14.7%, its highest level in a decade, and a figure that’s only expected to rise further, as the Turkish economy is projected to contract by 2% in 2019. Politically, the country’s intense friction with the US, as well as its internal upheaval, have also provided plenty of reasons for concern and clouded its outlook going forward.</p>
<div class="media media-element-container media-image_no_caption media-wysiwyg-align-center"><a href="https://mises-media.s3.amazonaws.com/styles/max_1160/s3/Grass_KW_17_1-600x429.png?itok=Ezidmfte" title="Grass_KW_17_1-600x429.png" class="colorbox" data-colorbox-gallery="gallery-file-83416-yTnT59RW67M" data-cbox-img-attrs="{"title": "", "alt": ""}"><img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/max_full/s3/Grass_KW_17_1-600x429.png?itok=5xVvVESd" width="600" height="429" alt="Grass_KW_17_1-600x429.png" title="" /></a></div>
<h4>An Artificial Boom and a Very Real Bust</h4>
<p>After the hotly contested and high-stake local elections at the end of March delivered severe blows to the Erdogan regime, the prospects of further instability were soon solidified. Erdogan, already in power for 18 years, is now pushing for a rerun of Istanbul mayoral election, following his party’s narrow defeat. It is precisely this timing, of a political inflection point combined with a recession, that makes the situation in Turkey all the more precarious.</p>
<p>For the last two decades, the country’s economy has been instrumental to the expansion and consolidation of power for Turkey’s president. However, the adoption of populist monetary policies and the artificial, debt-fueled growth has become increasingly unsustainable, as is usually the case. As the cracks are now apparent in the country’s economy, support is also at critical lows for the ruling party. In the midst of a recession, with further political friction on the horizon and a potential rerun in Istanbul, investors are justifiably concerned that political goals will overshadow the urgent need to resolve the economic woes of the country. The tough measures needed to stop the lira’s death spiral and to control the toxic debt ticking bomb, are unlikely to be winning electoral arguments.</p>
<p>The Turkish president is, after all, known for his interference in the economy and the private sector, while the central bank itself has lost credibility, as its independence has come under widespread doubt. Just before this last election, for example, it used its reserves to prop up the lira, with the relevant published data revealing that its foreign exchange reserves declined more than $2 billion in the week prior to the vote. According to rating agency Moody’s, gross and net reserves were “already at very low levels.”</p>
<div class="media media-element-container media-image_no_caption media-wysiwyg-align-center"><a href="https://mises-media.s3.amazonaws.com/styles/max_1160/s3/Grass_KW_17_2-600x358.png?itok=BhTAvITu" title="Grass_KW_17_2-600x358.png" class="colorbox" data-colorbox-gallery="gallery-file-83417-yTnT59RW67M" data-cbox-img-attrs="{"title": "", "alt": ""}"><img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/max_full/s3/Grass_KW_17_2-600x358.png?itok=5Yb9dBPV" width="600" height="358" alt="Grass_KW_17_2-600x358.png" title="" /></a></div>
<p>Apart from shaking investors’ trust and encouraging suspicions over the politicization of the central bank, the move also failed to support the currency, as the lira has continued to plummet anyway, under the pressure of the extensive concerns over the country’s dwindling reserves. Further pressure is exerted on the weakened currency, and on Erdogan’s credibility for that matter, by the increasingly dominant dollarization trend domestically. More and more Turkish citizens are turning to the USD and the Euro to protect their purchasing power, and even use them in their everyday transactions. According to recent <a href="https://www.ft.com/content/489b9dc2-5c38-11e9-9dde-7aedca0a081a">reports by the <em>Financial Times</em>,</a> foreign currency deposits by residents jumped by $2.1 billion in the last week of March, bringing the total to $167 billion.</p>
<p>The Turkish government has nevertheless been persistent in ignoring the flashing danger signs. Instead, the Erdogan regime remains focused on the political aspects of the current crisis, blaming all problems on foreign conspiracies and insisting on policies that would only serve to paper over the core weaknesses of the economy. Despite their efforts to control inflation and to pull the economy out of the recession, the fundamentals are still dire and investor sentiment remains very low. A new reform program unveiled in mid-April also failed to convince market participants of an improved outlook, with a J.P. Morgan survey showing that more than 80% of investors did not have confidence in the government’s ability to revive the economy. The plan merely included a $5 billion injection to struggling state banks, with no references to spending cuts or to any other realistic fiscal steps that would concretely help rein in the spiraling debt problem.</p>
<h4>Spillover Effects</h4>
<p>Turkey’s debt problem, coupled with the plummeting lira, is arguably the most important risk factor for the nation’s economy. To make matters worse, far from it posing a threat just to Turkey itself, it also has the potential to inflict significant damage elsewhere too, starting with key economies in the Eurozone.</p>
<p>At first glance, the situation in Turkey might resemble many past similar scenarios of a heavily indebted nation with a plummeting currency that descends into a severe recession and eventually gets bailed out, like Greece. However, there is one key difference that makes Turkey’s debt problem much more complicated and potentially dangerous. Unlike Greece, Italy or other seriously debt-laden economies, it’s not just government borrowing that’s the main risk here. Instead, it’s the unsustainable and increasingly unfinanceable corporate debt that makes Turkey a ticking time bomb and renders an IMF-rescue option problematic.</p>
<p>Private debt to GDP stands at a staggering 170%, while, overall, over half of the borrowing is denominated in foreign currencies. Thus, the collapse of the lira has made it extremely challenging for businesses to pay off or even service their debt, while the default risk has surged. Around $179 billion in external debt is due to mature until July 2019, which amounts to almost a quarter of the country’s annual economic output, according to JPMorgan estimates. Most of that, $146 billion, is owed by the private sector and banks in particular.</p>
<p>However dire the current debt predicament might seem for Turkey’s businesses and economic outlook, it is important to also consider the implications for its debtholders, especially since European banks feature prominently among them. In fact, the level of exposure in some cases is so worrying that it justifiably raises concerns that what happens in Turkey won’t just stay in Turkey.</p>
<div class="media media-element-container media-image_no_caption media-wysiwyg-align-center"><a href="https://mises-media.s3.amazonaws.com/styles/max_1160/s3/Grass_KW_17_3-595x450.png?itok=3Vp3ibja" title="Grass_KW_17_3-595x450.png" class="colorbox" data-colorbox-gallery="gallery-file-83419-yTnT59RW67M" data-cbox-img-attrs="{"title": "", "alt": ""}"><img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/max_full/s3/Grass_KW_17_3-595x450.png?itok=hk0_W2wK" width="595" height="450" alt="Grass_KW_17_3-595x450.png" title="" /></a></div>
<p>Spain’s banking sector is one of very few in the European bloc that was so far considered not to be problematic; especially in comparison to Italian or Greek banks. However, the exposure of Spanish banks to Turkish debt means that the currency and debt woes of Europe’s neighbor have decisively challenged these assumptions. Spain’s second-biggest bank, BBVA, controls 49.9% of Turkish bank Garanti, which has already reported a rise in non-performing loans. Spanish banks also led the lending spree to Turkish businesses over the past years, rendering them vulnerable to the spiking default risk.</p>
<p>Although Spanish banks were by far the greatest lenders for Turkey, French, Italian and German banks also have significant exposure to Turkish debt. This already became problematic from the onset of the Turkish woes this past summer, when investors dumped Eurozone bank shares and prices suffered significant blows. Among the worst hit were BBVA, Unicredit, and PNB Paribas. Yet still, a blow to the stock price is nothing compared to the damage that a sustained currency crisis and rising default risk can inflict to the already vulnerable European banking sector.</p>
<h4>Key Lessons</h4>
<p>Overall, Turkey’s woes are yet another important and timely reminder of the frailty of the current monetary system and of the banking sector, as well as of the systemic weaknesses and inevitable unsustainability of a centrally planned economy and of fiat money.</p>
<p>After all, the lira’s value, as that of any other fiat currency, depends on the trust the people place in its issuer. Once that is lost or even shaken, no measures and no force applied by the central planners can stabilize it. We saw that play out over the last months in Turkey, with the government trying a wide variety of approaches to control the currency’s fall, to no avail. That clearly demonstrated the flimsy and fickle nature of the entire system.</p>
<p>As the Turkish currency collapsed, demand for gold more than doubled in the country, while gold priced in lira reached all-time highs, as is to be expected in times of crisis. Erdogan’s public calls for citizens to sell the “gold under their pillows” and buy lira to help defend the country against the “economic attacks” from the outside were clearly ignored. Consumers flocked to the precious metal in response to the deteriorating fiat currency and gold imports to Turkey increased eightfold last December, while the Turkish central bank itself also dramatically increased its official reserves over the last two years.</p>
<div class="media media-element-container media-image_no_caption media-wysiwyg-align-center"><a href="https://mises-media.s3.amazonaws.com/styles/max_1160/s3/Grass_KW_17_4-600x338.png?itok=3BLlrVsw" title="Grass_KW_17_4-600x338.png" class="colorbox" data-colorbox-gallery="gallery-file-83418-yTnT59RW67M" data-cbox-img-attrs="{"title": "", "alt": ""}"><img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/max_full/s3/Grass_KW_17_4-600x338.png?itok=b3SSblFd" width="600" height="338" alt="Grass_KW_17_4-600x338.png" title="" /></a></div>
<p>As the country now joins the long list of nations that came to regret reckless interventionism and aggressive monetary manipulation, it also sends a strong message to those investors who are wise enough to heed it.</p>
<h6><em>Excerpted From a <a href="http://claudiograss.ch/2019/04/28/turkeys-inevitable-recession-part-i/">Two-Part</a> <a href="http://claudiograss.ch/2019/05/02/turkeys-inevitable-recession-part-ii/">Series</a> at <a href="http://claudiograss.ch/">claudiograss.ch</a></em></h6><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/Mxk4GZ36WDY" height="1" width="1" alt=""/>Claudio Grass<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/static-page/img/GettyImages-825715344.jpg?itok=Wy3Zs06Y" width="240" alt="GettyImages-825715344.jpg" />46405May 21, 2019 - 2:00 PMFront page feedno Turkey has been almost constantly in the news over the past year, as troubling headlines about its economy and political situation continue to pile up. In a currency meltdown that escalated last summer, the Turkish lira has plunged by nearly 40%, threateClaudio Grass Turkey has been almost constantly in the news over the past year, as troubling headlines about its economy and political situation continue to pile up. In a currency meltdown that escalated last summer, the Turkish lira has plunged by nearly 40%, threatening the Turkish economy as a whole. In January, inflation topped 20%, with skyrocketing food prices having an especially severe impact on the population. At the same time, unemployment hit 14.7%, its highest level in a decade, and a figure that’s only expected to rise further, as the Turkish economy is projected to contract by 2% in 2019. Politically, the country’s intense friction with the US, as well as its internal upheaval, have also provided plenty of reasons for concern and clouded its outlook going forward. An Artificial Boom and a Very Real Bust After the hotly contested and high-stake local elections at the end of March delivered severe blows to the Erdogan regime, the prospects of further instability were soon solidified. Erdogan, already in power for 18 years, is now pushing for a rerun of Istanbul mayoral election, following his party’s narrow defeat. It is precisely this timing, of a political inflection point combined with a recession, that makes the situation in Turkey all the more precarious. For the last two decades, the country’s economy has been instrumental to the expansion and consolidation of power for Turkey’s president. However, the adoption of populist monetary policies and the artificial, debt-fueled growth has become increasingly unsustainable, as is usually the case. As the cracks are now apparent in the country’s economy, support is also at critical lows for the ruling party. In the midst of a recession, with further political friction on the horizon and a potential rerun in Istanbul, investors are justifiably concerned that political goals will overshadow the urgent need to resolve the economic woes of the country. The tough measures needed to stop the lira’s death spiral and to control the toxic debt ticking bomb, are unlikely to be winning electoral arguments. The Turkish president is, after all, known for his interference in the economy and the private sector, while the central bank itself has lost credibility, as its independence has come under widespread doubt. Just before this last election, for example, it used its reserves to prop up the lira, with the relevant published data revealing that its foreign exchange reserves declined more than $2 billion in the week prior to the vote. According to rating agency Moody’s, gross and net reserves were “already at very low levels.” Apart from shaking investors’ trust and encouraging suspicions over the politicization of the central bank, the move also failed to support the currency, as the lira has continued to plummet anyway, under the pressure of the extensive concerns over the country’s dwindling reserves. Further pressure is exerted on the weakened currency, and on Erdogan’s credibility for that matter, by the increasingly dominant dollarization trend domestically. More and more Turkish citizens are turning to the USD and the Euro to protect their purchasing power, and even use them in their everyday transactions. According to recent reports by the Financial Times, foreign currency deposits by residents jumped by $2.1 billion in the last week of March, bringing the total to $167 billion. The Turkish government has nevertheless been persistent in ignoring the flashing danger signs. Instead, the Erdogan regime remains focused on the political aspects of the current crisis, blaming all problems on foreign conspiracies and insisting on policies that would only serve to paper over the core weaknesses of the economy. Despite their efforts to control inflation and to pull the economy out of the recession, the fundamentals are still dire and investor sentiment remains very low. A new reform program unveiled in mid-April also failed to convince market participants of an improved outlook, with a J.P. MorAustrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46405CJay Engel on the Entrepreneurial Lifehttp://feedproxy.google.com/~r/MisesMedia/~3/uyLAIeSJ2hA/46520
<p>The entrepreneurial life is good for the individual, the family, society and civilization. Whether your entrepreneurial undertaking is something small or something huge, or somewhere in between, doing something entrepreneurial, utilizing your own resources, benefits others and is therefore heroic.</p>
<h3>Show Notes</h3>
<p><strong>Successful entrepreneurs should not be called upon to “give back” to society.</strong> The entrepreneurs’ role itself is socially beneficial. They make money by producing goods and services that consumers value more than the money they pay to acquire them. Society — in the form of the market — has its own feedback loop to tell the entrepreneur whether or not value is being created for others: profit is the signal that society is experiencing value, and loss is the signal that the entrepreneur got it wrong and is not creating value. There is no need for a bureaucrat to tell us.</p>
<p><strong>But you don’t need a social purpose or a change-the-world idea, or even a monetary goal to be an entrepreneur. Just get started.</strong> C Jay Engel started straight out of school. Entrepreneurship was stability; bread and butter. He had skills in project management and found that people needed those skills, and he developed a consulting business. He was able to try to expand in other areas, which took him into technology; successes and failures were part of the recipe, as was fun. He enjoyed himself and was able to develop as a person.</p>
<p><strong>The pursuit of higher values can come later, when your entrepreneurial business matures and stabilizes. </strong>Initially, C Jay focused on what was immediately in front of him. Plans shift quickly and new directions open up, and agility is required. You can’t plan your entire entrepreneurial life at the outset. Now — still in his thirties — he is able to reflect on what he calls “grander things”, like the legacy he will leave to his kids. Not the financial one, but the kind of world he can contribute to, that they will live in. He likes to think that there are hundreds and thousands of entrepreneurs all over the world doing the same thing to help bring about that good world. It’s an exciting and inspiring spontaneous order: entrepreneurs making a better world by helping individuals.</p>
<p><strong>Is entrepreneurship especially arduous?</strong> It can be. Think of Elon Musk. The task of getting people to Mars to establish a colony is pretty arduous. It’s less so if you’re setting up a consulting shop. But there is uncertainty to grapple with, and doing so requires a certain mindset. It’s a learning process, and trying different ways to handle uncertainty in the multiple different ways you’ll encounter it makes you a better, more developed person. Constant self-awareness helps you realize what you need to do to handle conditions of uncertainty.</p>
<p><strong>Does that mean that a special set of personal attributes is required to be an entrepreneur? Is there a personality test?</strong> We’ve had a number of guests talk about elements of entrepreneurship, like a bias for action, risk mitigation, and brutal determination. But these are patterns of behavior more than they are personality traits. C Jay’s advice is: just do it. Examine yourself along the way and you’ll find out your strengths. And when you find that there are places where you can strengthen yourself (or your team), that’s what other people are for. You can’t be highly successful without engaging other people, so focus on that rather than on any so-called “weaknesses” you may be told you have.</p>
<p><strong>Technology helps you assemble not only your team, but also a full set of entrepreneurial resources. The entrepreneurial economy is highly collaborative.</strong> Whether it is Upwork or LinkedIn or Alibaba or Amazon, technology can help you assemble a team, a full set of resources and a supply chain. You can find marketers and accountants and engineers and interconnect them all over the globe or locally, in a team. Team building and team motivation are core skills (and can be a limiting factor). Self-reliance does not mean the same thing as it did in the past. The rugged individual is not the driver of the market economy. In fact, the entrepreneurial economy is highly collaborative — self-supporting rather than self-reliant. Any capital you acquire depends on the entrepreneurs in the earlier stage who produced it for you, in anticipation of your needs. Price signals from other entrepreneurs guide you. No entrepreneur is alone. The invisible hand is actually visible — it’s the price mechanism connecting you to all the people and all the resources in the world.</p>
<p><strong>How do we communicate this narrative to the world? The socialists are better at marketing than the entrepreneurs. </strong>Such harsh words are used about profit, and yet it is the social signal of approval. People who are benefiting from capitalism, like Hollywood celebrities and Silicon Valley billionaires, do not understand capitalism and decry it. What should entrepreneurs do? Just keep working at entrepreneurship. Keep making life better for customers and everyone else. It’s also healthy to reflect on how you are benefiting people around you. If you have a chance to say something or write something and share an idea then take it. Doing so is itself an act of entrepreneurship. Our message will emerge from the communication efforts of individuals.</p>
<p><strong>C Jay Engel himself has started <a href="https://austrolibertarian.com/magazine/" target="_blank">Austro Libertarian magazine</a>.</strong> It’s a new publication located somewhere between the academic rigor of QJAE and the shorter articles of Mises Daily. Original content in longer form articles, in your choice of digital or a beautifully designed and printed physical magazine. For C Jay, starting a magazine is another example of economic action rather than political action.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/uyLAIeSJ2hA" height="1" width="1" alt=""/>Hunter Hastings, C.Jay Engel<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/static-page/img/EconEntrepPod_750x516_20190215.png?itok=WNfBDF6N" width="240" alt="Economics for Entrepreneurs Podcast" title="Economics for Entrepreneurs Podcast" />46520May 21, 2019 - 12:15 PMFront page feedno The entrepreneurial life is good for the individual, the family, society and civilization. Whether your entrepreneurial undertaking is something small or something huge, or somewhere in between, doing something entrepreneurial, utilizing your own resourcHunter Hastings, C.Jay Engel The entrepreneurial life is good for the individual, the family, society and civilization. Whether your entrepreneurial undertaking is something small or something huge, or somewhere in between, doing something entrepreneurial, utilizing your own resources, benefits others and is therefore heroic. Show Notes Successful entrepreneurs should not be called upon to “give back” to society. The entrepreneurs’ role itself is socially beneficial. They make money by producing goods and services that consumers value more than the money they pay to acquire them. Society — in the form of the market — has its own feedback loop to tell the entrepreneur whether or not value is being created for others: profit is the signal that society is experiencing value, and loss is the signal that the entrepreneur got it wrong and is not creating value. There is no need for a bureaucrat to tell us. But you don’t need a social purpose or a change-the-world idea, or even a monetary goal to be an entrepreneur. Just get started. C Jay Engel started straight out of school. Entrepreneurship was stability; bread and butter. He had skills in project management and found that people needed those skills, and he developed a consulting business. He was able to try to expand in other areas, which took him into technology; successes and failures were part of the recipe, as was fun. He enjoyed himself and was able to develop as a person. The pursuit of higher values can come later, when your entrepreneurial business matures and stabilizes. Initially, C Jay focused on what was immediately in front of him. Plans shift quickly and new directions open up, and agility is required. You can’t plan your entire entrepreneurial life at the outset. Now — still in his thirties — he is able to reflect on what he calls “grander things”, like the legacy he will leave to his kids. Not the financial one, but the kind of world he can contribute to, that they will live in. He likes to think that there are hundreds and thousands of entrepreneurs all over the world doing the same thing to help bring about that good world. It’s an exciting and inspiring spontaneous order: entrepreneurs making a better world by helping individuals. Is entrepreneurship especially arduous? It can be. Think of Elon Musk. The task of getting people to Mars to establish a colony is pretty arduous. It’s less so if you’re setting up a consulting shop. But there is uncertainty to grapple with, and doing so requires a certain mindset. It’s a learning process, and trying different ways to handle uncertainty in the multiple different ways you’ll encounter it makes you a better, more developed person. Constant self-awareness helps you realize what you need to do to handle conditions of uncertainty. Does that mean that a special set of personal attributes is required to be an entrepreneur? Is there a personality test? We’ve had a number of guests talk about elements of entrepreneurship, like a bias for action, risk mitigation, and brutal determination. But these are patterns of behavior more than they are personality traits. C Jay’s advice is: just do it. Examine yourself along the way and you’ll find out your strengths. And when you find that there are places where you can strengthen yourself (or your team), that’s what other people are for. You can’t be highly successful without engaging other people, so focus on that rather than on any so-called “weaknesses” you may be told you have. Technology helps you assemble not only your team, but also a full set of entrepreneurial resources. The entrepreneurial economy is highly collaborative. Whether it is Upwork or LinkedIn or Alibaba or Amazon, technology can help you assemble a team, a full set of resources and a supply chain. You can find marketers and accountants and engineers and interconnect them all over the globe or locally, in a team. Team building and team motivation are core skills (and can be a limiting factor). Self-reliance does not mean the same thing as it dAustrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46520The Unseen Costs of "Medicare for All"http://feedproxy.google.com/~r/MisesMedia/~3/-msXg7dQoW8/46518
<p><strong>Listen to <a href="https://mises.org/library/unseen-costs-medicare-all" target="_blank">the <em>Audio Mises Wire</em> version</a> of this article.</strong></p>
<p>Most of the attention on Bernie Sanders’ proposed “Medicare for All” plan has focused on the financial costs of its implementation.</p>
<p>This is understandable, given that some estimates project costs to <a href="https://www.mercatus.org/publications/federal-fiscal-policy/costs-national-single-payer-healthcare-system"> exceed $32 trillion </a> over its first ten years, and that Medicare is already suffering massive losses – more than <a href="https://thefederalist.com/2019/04/23/medicare-trustees-report-reality-checks-bernie-sanders-socialist-delusions/"> $130 billion </a> since 2008 – along with facing unfunded liabilities in <a href="https://www.usdebtclock.org/">excess of $30 trillion.</a></p>
<p>But what about the non-financial costs like doctor shortages, foregone treatment due to lack of access to care and tens of thousands of deaths due to overly aggressive care?</p>
<h4>Will Supply Meet Demand?</h4>
<p>Basic economics, and common sense, tells us that when the marginal cost to the consumer for a good or service at the point of sale is reduced to zero, demand will increase significantly.</p>
<p>Under Sanders’ Medicare for All plan, there will be no payment made by patients when they receive treatment. Medical care consumers will no doubt make more frequent visits to doctors, specialists and emergencies rooms – often times for unnecessary treatments – because, after all, it won’t cost them anything.</p>
<p><strong>[RELATED: "<a href="https://mises.org/wire/single-payer-healthcare-worst-kind-universal-healthcare">Single-Payer Healthcare Is the Worst Kind of Universal Healthcare</a>" by Ryan McMaken]</strong></p>
<p>Moreover, because people will be taxed to help finance the plan and pay the same amount of tax regardless of their usage, people will feel obligated to “get their money’s worth” and flood doctors’ offices with more frequent check-ups and testing.</p>
<p>The question then becomes: will there be sufficient supply to meet this spike in demand?</p>
<p>Most indicators say no.</p>
<p>According to the <a href="https://www.thedoctorshortage.com/pages/shortage/"> American Association of Medical Colleges</a>, the U.S. can expect a doctor shortage of up to 120,000 physicians by 2030, thanks in no small part to our nation’s rapidly growing senior citizen population – and this is without factoring in accelerated demand by Medicare for All.</p>
<p>Doctors are already struggling to keep up with current demand. According to <a href="https://physiciansfoundation.org/research-insights/the-physicians-foundation-2018-physician-survey/"> this 2018 survey by the Physicians Foundation</a>, a stunning 80 percent of physicians claim to be “at capacity or overextended.”</p>
<p>The future doesn’t look bright, either. A <a href="https://physiciansfoundation.org/wp-content/uploads/2018/01/Biennial_Physician_Survey_2016.pdf"> 2016 Physicians Foundation survey </a> found 48 percent of physicians planning to cut back hours, retire, or take other steps toward limiting patient access to their practices.</p>
<p>Burnt out and semi-retired doctors is not a reliable pool of providers upon which to throw a sizeable spike in demand for services that Medicare for All would usher in.</p>
<h4>Pay Cuts Would Make the Shortages Worse</h4>
<p>Medicare reimbursement rates fall well below the costs of providing care. In 2017, payment shortfalls to hospitals for Medicare services totaled a whopping <a href="https://www.aha.org/system/files/2019-01/underpayment-by-medicare-medicaid-fact-sheet-jan-2019.pdf"> $54 billion. </a></p>
<p>In treating Medicare patients, hospitals only receive about 87 cents in reimbursement for every dollar they spend in care.</p>
<p>If all patients become Medicare patients, how will medical providers stay in business?</p>
<p>Indeed, Medicare reimbursements have been estimated to be 40 percent lower than private insurance payments.</p>
<p>If you think the doctor shortage is bad now, what will happen when doctors are forced to take a <a href="https://www.heritage.org/medicare/commentary/how-medicare-all-bills-would-worsen-the-doctor-shortage"> 40 percent pay cut </a> on all their former private insurance patients?</p>
<h4>Lack of Access Will Bring Unhealthy Results</h4>
<p>With greater demand straining a system with dwindling supply, a new cost to patients will emerge: time.</p>
<p>Wait times will inevitably increase substantially, bringing with it a human toll in the form of prolonged suffering of symptoms as well as the mental anguish over the uncertainty that comes with a lack of regular access to care.</p>
<p>And an inability to schedule check ups and other preventative services on a regular basis will cause patients to delay seeking care and treatment, resulting in greater suffering and preventable deaths.</p>
<p>Moreover, like underage college kids who binge drink on the unpredictable occasions they are able to score beer, when patients finally do see a doctor they will be more likely to seek overly aggressive care and excessive testing and treatment. After all, there’s no telling when they’ll get another appointment, and it’s free.</p>
<p>Excessive testing and treatment is already a significant problem in our current system which features a majority of medical services being paid for by a third party. According to <a href="https://www.healthcarefinancenews.com/news/unnecessary-medical-tests-treatments-cost-200-billion-annually-cause-harm"> this Health Care Finance News article, </a> “Some experts estimate that at least $200 billion is wasted annually on excessive testing and treatment.” Compare this to the <a href="https://www.macpac.gov/wp-content/uploads/2018/03/Annual-Analysis-of-Disproportionate-Share-Hospital-Allotments-to-States.pdf"> roughly $30 billion </a> in charity care for the uninsured we hear so much about as supposedly being a major driver of rising healthcare costs.</p>
<p>Even more significant is the harm caused by overly aggressive and excessive treatment, which generated “mistakes and injuries believed to cause 30,000 deaths each year.”</p>
<p>Imagine the added financial and human toll of excessive care if we transitioned to a Medicare for All system.</p>
<h4>Black Markets Will Cause Unequal Treatment</h4>
<p>One of the purported benefits of a Medicare for All plan is that it would make access to quality care more equitable. When everyone is covered, the poor will have the same level of care as the rich, goes the argument.</p>
<p>But doctor shortages and long lines under Medicare for All will make access to care exceedingly rare, and in high demand. Such conditions would create a black market in which the rich would pay under the table for quicker service and to avoid the Medicare line.</p>
<p>The rich would have timely access to quality care, while the poor would be left to compete against each other for what little facetime they can get with a doctor. The goal of equity will be unfulfilled.</p>
<h4>Myth of Administrative Cost Savings</h4>
<p>Advocates of Medicare for All claim that big administrative savings will allow more generous payments to doctors, and thus help avoid shortages. No worries about long wait times and a lack of access to care, they assure us.</p>
<p>But such hopes are fool’s gold.</p>
<p>Most of the projected administrative cost savings are based on faulty interpretations of data. Medicare for All supporters point to data showing that Medicare administrative costs are lower than those of private insurance companies – as a percentage of total costs per beneficiary.</p>
<p>But Medicare patients tend to be older and sicker, and <a href="https://www.forbes.com/sites/theapothecary/2017/09/20/medicare-for-all-would-increase-not-save-administrative-costs/#45266e060ba5"> Medicare spends nearly two and a half times more per beneficiary </a> compared to private insurance plans. Calculating administrative costs as a percentage of costs of care paints a highly misleading picture.</p>
<p>Indeed, according to <a href="https://www.heritage.org/health-care-reform/report/medicare-administrative-costs-are-higher-not-lower-private-insurance"> this Heritage Foundation analysis</a>, administrative costs <em>per person </em>are about 12 percent higher in Medicare compared to private insurance.</p>
<p>Switching millions of people from private insurance onto Medicare will drastically increase administrative costs, making it even less likely for Medicare to adequately reimburse doctors and hospitals.</p>
<p>Moreover, when scarce resources are allocated by government bureaucracy rather than the market price mechanism, rationing by administration tends to take over.</p>
<p>As shown in the chart below, thanks primarily to the federal government’s increasing intervention into the healthcare market, the number of healthcare administrators has exploded by more than 3,000 percent since 1970, compared to a growth of physicians of less than 200 percent.</p>
<div class="media media-element-container media-image_no_caption"><a href="https://mises-media.s3.amazonaws.com/styles/max_1160/s3/hysicians.jpg?itok=u-ra4RnD" title="physicians.jpg" class="colorbox" data-colorbox-gallery="gallery-file-83643-yTnT59RW67M" data-cbox-img-attrs="{"title": "", "alt": ""}"><img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/max_full/s3/hysicians.jpg?itok=_gx47nyt" width="693" height="444" alt="hysicians.jpg" title="" /></a></div>
<h4>Conclusion</h4>
<p>The well-reported price tag for Bernie Sanders’ Medicare for All plan is eye-popping. But of greater concern is the unseen price that will be paid in the form of human suffering and even death as a result of doctor shortages, lack of access to care, and overly aggressive “binge” treatment and testing.</p>
<p>Questions about how to pay for this single-payer plan can be easily answered in the minds of many with the old mantra “tax the rich.”</p>
<p>But how to answer for the human toll of Medicare for All is a far more difficult chore for advocates. Opponents would be wise to make these unseen costs far more visible.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/-msXg7dQoW8" height="1" width="1" alt=""/>Bradley Thomas<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/static-page/img/sanders.PNG?itok=gGK6yTb5" width="240" alt="sanders.PNG" />46518May 21, 2019 - 11:00 AMFront page feedno Listen to the Audio Mises Wire version of this article. Most of the attention on Bernie Sanders’ proposed “Medicare for All” plan has focused on the financial costs of its implementation. This is understandable, given that some estimates project costs toBradley Thomas Listen to the Audio Mises Wire version of this article. Most of the attention on Bernie Sanders’ proposed “Medicare for All” plan has focused on the financial costs of its implementation. This is understandable, given that some estimates project costs to exceed $32 trillion over its first ten years, and that Medicare is already suffering massive losses – more than $130 billion since 2008 – along with facing unfunded liabilities in excess of $30 trillion. But what about the non-financial costs like doctor shortages, foregone treatment due to lack of access to care and tens of thousands of deaths due to overly aggressive care? Will Supply Meet Demand? Basic economics, and common sense, tells us that when the marginal cost to the consumer for a good or service at the point of sale is reduced to zero, demand will increase significantly. Under Sanders’ Medicare for All plan, there will be no payment made by patients when they receive treatment. Medical care consumers will no doubt make more frequent visits to doctors, specialists and emergencies rooms – often times for unnecessary treatments – because, after all, it won’t cost them anything. [RELATED: "Single-Payer Healthcare Is the Worst Kind of Universal Healthcare" by Ryan McMaken] Moreover, because people will be taxed to help finance the plan and pay the same amount of tax regardless of their usage, people will feel obligated to “get their money’s worth” and flood doctors’ offices with more frequent check-ups and testing. The question then becomes: will there be sufficient supply to meet this spike in demand? Most indicators say no. According to the American Association of Medical Colleges, the U.S. can expect a doctor shortage of up to 120,000 physicians by 2030, thanks in no small part to our nation’s rapidly growing senior citizen population – and this is without factoring in accelerated demand by Medicare for All. Doctors are already struggling to keep up with current demand. According to this 2018 survey by the Physicians Foundation, a stunning 80 percent of physicians claim to be “at capacity or overextended.” The future doesn’t look bright, either. A 2016 Physicians Foundation survey found 48 percent of physicians planning to cut back hours, retire, or take other steps toward limiting patient access to their practices. Burnt out and semi-retired doctors is not a reliable pool of providers upon which to throw a sizeable spike in demand for services that Medicare for All would usher in. Pay Cuts Would Make the Shortages Worse Medicare reimbursement rates fall well below the costs of providing care. In 2017, payment shortfalls to hospitals for Medicare services totaled a whopping $54 billion. In treating Medicare patients, hospitals only receive about 87 cents in reimbursement for every dollar they spend in care. If all patients become Medicare patients, how will medical providers stay in business? Indeed, Medicare reimbursements have been estimated to be 40 percent lower than private insurance payments. If you think the doctor shortage is bad now, what will happen when doctors are forced to take a 40 percent pay cut on all their former private insurance patients? Lack of Access Will Bring Unhealthy Results With greater demand straining a system with dwindling supply, a new cost to patients will emerge: time. Wait times will inevitably increase substantially, bringing with it a human toll in the form of prolonged suffering of symptoms as well as the mental anguish over the uncertainty that comes with a lack of regular access to care. And an inability to schedule check ups and other preventative services on a regular basis will cause patients to delay seeking care and treatment, resulting in greater suffering and preventable deaths. Moreover, like underage college kids who binge drink on the unpredictable occasions they are able to score beer, when patients finally do see a doctor they will be more likely to seek overly aggressive care and excessive testing and treatment. Austrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46518Tucker Carlson and AOC Are Wrong About Christianity and Usuryhttp://feedproxy.google.com/~r/MisesMedia/~3/KA9xLuo5l_s/46517
<p><strong>Listen to <a href="https://mises.org/library/tucker-carlson-and-aoc-are-wrong-about-christianity-and-usury" target="_blank">the <em>Audio Mises Wire</em> version</a> of this article.</strong></p>
<p>Recently the nominally conservative, but increasingly populist firebrand Tucker Carlson joined self-proclaimed socialists Representative Alexandria Ocasio-Cortez and Senator Bernie Sanders in <u> <a href="https://thehill.com/policy/finance/442970-ocasio-cortez-says-bill-would-destroy-predatory-payday-loan-industry"> calling </a> </u> for a federally-imposed 15 percent cap on interest rates. In a livestream video introducing their new bill, the <u> <a href="https://www.sanders.senate.gov/newsroom/press-releases/senator-sanders-and-representative-ocasio-cortez-unveil-the-loan-shark-prevention-act-to-protect-consumers"> Loan Shark Prevention Act </a> </u> , the two legislators lashed out against credit card companies and the payday loan industry for engaging in “predatory” behavior.</p>
<p>“[T]hey are absolutely, indisputably right,” Carlson <u> <a href="https://thehill.com/homenews/media/443242-tucker-carlson-says-sanders-ocasio-cortez-are-absolutely-indisputably-right-on"> declared </a> </u> on his Fox News show. But the measure is not a uniquely progressive idea, Carlson was quick to note. Bans on “excessive” interest rates, otherwise known as “usury,” have been in place throughout human history. “There’s a reason why the world’s great religions condemn usury...High interest rates exploit the weak,” Carlson asserted.</p>
<p><strong>[RELATED: <a class="active" href="https://mises.org/power-market/bernie-and-ocasio-cortez-declare-war-poor-anti-credit-card-law">"Bernie and Ocasio-Cortez Declare War on the Poor With Anti-Credit-Card Law" </a>by Ryan McMaken]</strong></p>
<p>Congresswoman Ocasio-Cortez joined Carlson in <u> <a href="https://twitter.com/AOC/status/1129213168222375936">citing</a> </u> religious admonitions against lending at interest. She naively and bizarrely attempted to catch Christians in their alleged hypocrisy, tweeting, “Usury - aka high interest - happens to be explicitly denounced in the Bible...Looking forward to having the religious right uphold their principles and sign onto my bill.”</p>
<p>While Carlson and Ocasio-Cortez are technically correct when they claim that Christians have condemned usury in the past, they have left out the other half of the story. It was primarily Christian thinkers, working within new market-based paradigms, who demonstrated that the collection of interest was not actually sinful and, what’s more, that its prohibition was economically irrational.</p>
<h4><strong>The “Sin” of Usury</strong></h4>
<p>The first thing to note is that, contra AOC’s claim, the Bible does not define usury simply as “high interest.” In reality, up until the Late Medieval Period, usury was understood as charging any interest <em>whatsoever </em>and did not come to be widely defined as “excessive interest” until much later.</p>
<p>Christians inherited their suspicion of usury from Judaism. The Torah makes multiple injunctions against the collection of interest (see Exodus 22:24, Leviticus 25:36-37, Deuteronomy 23:19, among others). Though most of these passages forbid charging interest to fellow Jews, it was permitted to lend at interest to foreigners.</p>
<p>Christians, however, made no such exception. Medieval philosophers were almost universally agreed that the mere collection of interest, at any rate and to any person, constituted a serious sin. Scripture seemed clear in its denunciation of the practice: the Psalmist praised the just man who “does not put out his money at interest” (15:5). This verse was a favorite amongst Church officials and theologians who argued vehemently in favor of usury prohibitions. No serious attempt was made, however, to reconcile a strict prohibition on usury with Christ’s seemingly implicit acceptance of the practice in His “Parable of the Talents” (Matthew 25:14-30).</p>
<p>For the first few centuries of Christian rule in Europe, usury was regarded as a sin of avarice and was forbidden in all cases. Only a greedy and uncharitable soul would demand to be paid interest on a loan given to the needy. Christ Himself asked that His followers lend to their neighbors, asking nothing at all in return (Luke 6:35). Several early Church councils thus condemned clerics for lending at interest; laymen too were castigated for this “shameful gain.” In time, secular authorities would ban usury as well.</p>
<p>It’s easy to understand why usury was so despised. In the subsistence economies of the Ancient and Medieval eras, loans for the majority of people were often only necessary in times of great need or distress. Under these circumstances, the moral response was not to seek profit from the poor, but to offer charity. To expect repayment for what ought to be charity was one thing, but it was a grave sin “when more is asked than is given,” as <u> <a href="https://books.google.com/books?id=N1TiJgiWcqQC&q=more+is+asked+than+is+given#v=snippet&q=more%20is%20asked%20than%20is%20given&f=false"> one </a> </u> Medieval text put it.</p>
<h4><strong>Defending Usury</strong></h4>
<p>Changing economic conditions during the 13th and 14th centuries, however, induced Medieval authors to rethink the issue of usury. New commercial enterprises increased the demand for credit while raising significant questions about the morality of profits. Loans were no longer predominantly given in times of emergency or to the poor, but also to middle-class merchants. It was now difficult to argue that charging interest was always “uncharitable.”</p>
<p>Contemporary opinions differed as to when usury was morally acceptable. While some exceptions were allowed, most theologians and philosophers still considered charging interest to be an unnatural and exploitative transaction. Profits on the sale of goods and services, meanwhile, were not condemned. Farmers, manufacturers, and merchants created real value and were thus entitled to the fruits of their labor. Moneylenders, on the other hand, reaped profits off of their “idle money.” St. Albert the Great (1193-1280) expressed the commonly-held view that “the usurer without labor, suffering or fear gathers riches from the labor, suffering and vicissitudes of his neighbor.”</p>
<p>Other Medieval thinkers, however, disagreed with this premise. It was simply not true that lenders suffered no “fear” when they extended loans, some argued. In his 1499 treatise, German theologian Conrad Summenhart (1465-1511) pointed out that lenders always had to fear that they would lose money if the borrower defaulted. This observation was made more forcefully by the Spanish Franciscan monk Juan de Medina (1490-1546) who reasoned that exposing one’s property “to the risk of being lost, is sellable, and purchasable at a price, nor is it among those things which are to be done gratuitously.”</p>
<p>It took many decades, but the assumption of risk slowly became recognized as a legitimate justification for charging interest. Despite this, most writers, not wanting to abandon traditional Church teaching, still held that lending at interest was immoral for so-called “risk-less” loans. But even if such a loan existed (and it almost certainly does not), risk is not the only consideration a lender has when loaning money.</p>
<p>Near the end of the 13th century, the distinguished canonist Cardinal Hostiensis recognized that there is a clear opportunity-cost to lending money. Charging interest would allow the creditor to be compensated for any profit he could have made if he had invested his money elsewhere, a doctrine known as <em>lucrum cessans</em> (profit ceasing). Hostiensis strangely did not apply the doctrine to professional moneylenders, but only to those who make loans as charity. Cardinal Cajetan (1468-1534), on the other hand, taught that <em>lucrum cessans</em> justified any loan made to businessmen, though not to consumers.</p>
<p>It would not be until the early 17th century before a Christian thinker would eliminate all restrictions on <em>lucrum cessans</em>. In 1603, Flemish-born theologian Leonard Lessius (1554-1623) wrote that the burden of compensating the lender for his forgone profit may be assigned to the debtor in the form of interest. As economist Murray Rothbard <u> <a href="https://mises-media.s3.amazonaws.com/Austrian%20Perspective%20on%20the%20History%20of%20Economic%20Thought_1_Economic%20Thought%20Before%20Adam%20Smith.pdf"> noted </a> </u> , “this meant that Leonard Lessius justified not only businessmen or investors planning to invest their money, but also <em>any </em>people with liquid funds, including professional money-lenders.” Cardinal Juan de Lugo (1583-1660) declared that the doctrine of <em>lucrum cessans</em> is “the general title for purging usury.” After centuries of intellectual scrutiny, many were beginning to realize that the traditional Christian ban on usury, while still officially in force, was nothing more than a “hollow shell.”</p>
<h4><strong>So, What is the Christian Perspective on Usury?</strong></h4>
<p>Few if any modern Christians would oppose lending at interest. In spite of her direct (and disingenuous) appeal to Scripture, most Christians recognize that AOC’s strictly literalist interpretation of Biblical teachings on usury is sorely lacking. A more nuanced perspective would reveal that these passages condemn lending at interest only to the destitute. Loans were made to people who were likely well-acquainted with each other. The Old Testament authors did not and could not anticipate the complicated and multifarious financial services which have developed over the past several centuries. And what they could not know about, they could not denounce. As Albert R. Jonsen and Stephen Toulmin <u> <a href="https://books.google.com/books?id=N1TiJgiWcqQC&q=193#v=snippet&q=193&f=false"> write </a> </u> , the Biblical admonitions against usury “had lost their force because the general terms in which they were expressed could hardly cover the multiple kinds of transactions that passed for ‘loans.’”</p>
<p>Even then, not every Biblical passage on usury denounces the practice. In the aforementioned “Parable of the Talents,” Christ likens the judgment of God to a man who goes on a journey and entrusts his property to his three servants. Two of his servants increase their shares, earning a profit for their master. The third, however, buries his share in the ground. The master is furious and tells the unproductive servant: “Thou oughtest therefore to have put my money to the exchangers, and then at my coming I should have received mine own with <em>usury</em>.” Jesus was, of course, not giving an economics lesson here; but it would be strange indeed if He were to compare God to a man who profits on usury if it were an immoral activity.</p>
<p>That being said, many Christians would probably agree that unusually high-priced loans to those in severe financial distress should still be considered morally suspect, and arguably evil if one consciously took advantage of the poor by charging an exorbitant amount of interest, especially to a friend, relative, or coworker. But if there is a uniform rate, applied to any debtor under any and all circumstances, above which all accrued interest is “excessive?” Is it 15 percent, as Ocasio-Cortez, Sanders, and Carlson believe? Even those who generally support price ceilings would admit that it would be ridiculous to apply the same maximum price to a diverse set of goods and services, so why should we expect financial products to all be similarly priced? Are all loans priced above 15 percent automatically “exploitative”?</p>
<p>At the Council of Trent in 1554, Father Juan Polanco <u> <a href="https://books.google.com/books?id=RNipCKHdnlsC&pg=PA190&lpg=PA190&dq=father+juan+polanco+on+usury&source=bl&ots=RdWWmjLvgS&sig=ACfU3U2uMJsp1JJL01LdKkMefbXCuiuccw&hl=en&sa=X&ved=2ahUKEwjLnZCEk6XiAhUKWa0KHbGvC1wQ6AEwCnoECAcQAQ#v=onepage&q=father%20juan%20polanco%20on%20usury&f=false"> recognized </a> </u> the complexity of the issue: “[I]t is extremely difficult to detect when...injustice takes place in commercial dealings…[T]he matter, being a question of morals, only admits of probability, because its nature is such that the least change of circumstances renders it necessary to revise one’s judgment of the whole affair.”</p>
<p>To impose a cap on interest rates, without any reference to the complex and varied financial arrangements individuals find themselves operating within, is consistent with neither Scriptural teachings nor with the past three-hundred years of Christian theology.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/KA9xLuo5l_s" height="1" width="1" alt=""/>Tyler Curtis<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/ocasio_0.PNG?itok=SeJG_DI8" width="240" alt="ocasio_0.PNG" />46517May 21, 2019 - 6:00 AMFront page feedno Listen to the Audio Mises Wire version of this article. Recently the nominally conservative, but increasingly populist firebrand Tucker Carlson joined self-proclaimed socialists Representative Alexandria Ocasio-Cortez and Senator Bernie Sanders in callinTyler Curtis Listen to the Audio Mises Wire version of this article. Recently the nominally conservative, but increasingly populist firebrand Tucker Carlson joined self-proclaimed socialists Representative Alexandria Ocasio-Cortez and Senator Bernie Sanders in calling for a federally-imposed 15 percent cap on interest rates. In a livestream video introducing their new bill, the Loan Shark Prevention Act , the two legislators lashed out against credit card companies and the payday loan industry for engaging in “predatory” behavior. “[T]hey are absolutely, indisputably right,” Carlson declared on his Fox News show. But the measure is not a uniquely progressive idea, Carlson was quick to note. Bans on “excessive” interest rates, otherwise known as “usury,” have been in place throughout human history. “There’s a reason why the world’s great religions condemn usury...High interest rates exploit the weak,” Carlson asserted. [RELATED: "Bernie and Ocasio-Cortez Declare War on the Poor With Anti-Credit-Card Law" by Ryan McMaken] Congresswoman Ocasio-Cortez joined Carlson in citing religious admonitions against lending at interest. She naively and bizarrely attempted to catch Christians in their alleged hypocrisy, tweeting, “Usury - aka high interest - happens to be explicitly denounced in the Bible...Looking forward to having the religious right uphold their principles and sign onto my bill.” While Carlson and Ocasio-Cortez are technically correct when they claim that Christians have condemned usury in the past, they have left out the other half of the story. It was primarily Christian thinkers, working within new market-based paradigms, who demonstrated that the collection of interest was not actually sinful and, what’s more, that its prohibition was economically irrational. The “Sin” of Usury The first thing to note is that, contra AOC’s claim, the Bible does not define usury simply as “high interest.” In reality, up until the Late Medieval Period, usury was understood as charging any interest whatsoever and did not come to be widely defined as “excessive interest” until much later. Christians inherited their suspicion of usury from Judaism. The Torah makes multiple injunctions against the collection of interest (see Exodus 22:24, Leviticus 25:36-37, Deuteronomy 23:19, among others). Though most of these passages forbid charging interest to fellow Jews, it was permitted to lend at interest to foreigners. Christians, however, made no such exception. Medieval philosophers were almost universally agreed that the mere collection of interest, at any rate and to any person, constituted a serious sin. Scripture seemed clear in its denunciation of the practice: the Psalmist praised the just man who “does not put out his money at interest” (15:5). This verse was a favorite amongst Church officials and theologians who argued vehemently in favor of usury prohibitions. No serious attempt was made, however, to reconcile a strict prohibition on usury with Christ’s seemingly implicit acceptance of the practice in His “Parable of the Talents” (Matthew 25:14-30). For the first few centuries of Christian rule in Europe, usury was regarded as a sin of avarice and was forbidden in all cases. Only a greedy and uncharitable soul would demand to be paid interest on a loan given to the needy. Christ Himself asked that His followers lend to their neighbors, asking nothing at all in return (Luke 6:35). Several early Church councils thus condemned clerics for lending at interest; laymen too were castigated for this “shameful gain.” In time, secular authorities would ban usury as well. It’s easy to understand why usury was so despised. In the subsistence economies of the Ancient and Medieval eras, loans for the majority of people were often only necessary in times of great need or distress. Under these circumstances, the moral response was not to seek profit from the poor, but to offer charity. To expect repayment for what ought to be charity was one thing, but it was a grAustrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46517Harvard Astronomy Chair Avi Loeb Explains the Physics of Black Holeshttp://feedproxy.google.com/~r/MisesMedia/~3/4SxCHBIn0DA/46557
<p>Bob brings on special guest <a href="https://astronomy.fas.harvard.edu/people/avi-loeb" target="_blank">Avi Loeb</a>, who is the Frank B. Baird Jr., Professor of Science and Chair of the Astronomy Department at Harvard University. Among other positions, Professor Loeb is founding Director of the Black Hole Initiative, and is thus ideally suited to explain the recent images of a massive black hole circulating on social media. Loeb also has been at <a href="https://blogs.scientificamerican.com/observations/6-strange-facts-about-the-interstellar-visitor-oumuamua/" target="_blank">the center of media discussion</a> concerning the strange object in space named <em>‘Oumuamua</em>, which has several properties that make Loeb hypothesize that it might not be a strictly natural phenomenon.</p>
<p>For more information, see <a href="https://bobmurphyshow.com" target="_blank">BobMurphyShow.com</a>. <em>The Bob Murphy Show</em> is also available on <a href="https://itunes.apple.com/us/podcast/bob-murphy-show/id1441789978?ls=1" target="_blank">iTunes</a>, <a href="https://www.stitcher.com/podcast/bob-murphy-show" target="_blank">Stitcher</a>, <a href="https://open.spotify.com/show/0tfuV0zn9W0hXuL8AkMPGI">Spotify</a>, and <a href="https://mises.org/itunes/732" target="_blank">via RSS</a>.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/4SxCHBIn0DA" height="1" width="1" alt=""/>Robert P. Murphy<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/static-page/img/BobMurphyPodcast_750x516.png?itok=HFyx6Yti" width="240" alt="The Bob Murphy Show" title="The Bob Murphy Show" />46557May 20, 2019 - 5:15 PMFront page feedno Bob brings on special guest Avi Loeb, who is the Frank B. Baird Jr., Professor of Science and Chair of the Astronomy Department at Harvard University. Among other positions, Professor Loeb is founding Director of the Black Hole Initiative, and is thus idRobert P. Murphy Bob brings on special guest Avi Loeb, who is the Frank B. Baird Jr., Professor of Science and Chair of the Astronomy Department at Harvard University. Among other positions, Professor Loeb is founding Director of the Black Hole Initiative, and is thus ideally suited to explain the recent images of a massive black hole circulating on social media. Loeb also has been at the center of media discussion concerning the strange object in space named ‘Oumuamua, which has several properties that make Loeb hypothesize that it might not be a strictly natural phenomenon. For more information, see BobMurphyShow.com. The Bob Murphy Show is also available on iTunes, Stitcher, Spotify, and via RSS. Austrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46557The Anti-Capitalistic Mentalityhttp://feedproxy.google.com/~r/MisesMedia/~3/xoo66ZUpExI/46507
<p><em>The Human Action Podcast</em> reviews another overlooked classic by Mises: <em><a href="https://mises.org/AntiCap">The Anti-Capitalistic Mentality</a></em>. This book takes no prisoners, showing how envy motivates progressive and conservative intellectuals who fear dynamic capitalism. The real reactionaries, according to Mises? Socialists who want to keep everyone stuck at one station in life.</p>
<p>Our friend Andy Duncan from Mises UK, who recently <a href="https://mises.org/wire/power-misess-anti-capitalistic-mentality">reviewed the book</a>, joins the show to discuss.</p>
<p>Read the book free <a href="https://mises.org/library/anti-capitalistic-mentality">here</a>, or enter code "HAPOD" in our bookstore to buy a <a href="https://store.mises.org/Anti-Capitalistic-Mentality-The-P45.aspx">softcover</a> for only $5!</p>
<p>Subscribe and listen on <a href="https://itunes.apple.com/us/itunes-u/mises-weekends/id884207568?mt=10" target="_blank">iTunes</a>,<a href="https://www.youtube.com/playlist?list=PLALopHfWkFlFTj__lkebZfUw5s-CWVuIt"> YouTube</a>, <a href="http://www.stitcher.com/podcast/mises-weekends" target="_blank">Stitcher</a>, <a href="https://soundcloud.com/misesmedia/sets/mises-weekends" target="_blank">Soundcloud</a>, <a href="https://playmusic.app.goo.gl/?ibi=com.google.PlayMusic&isi=691797987&ius=googleplaymusic&apn=com.google.android.music&link=https%3A//play.google.com/music/m/Ifcmskvragsr4a6mpvouxmp4aze%3Ft%3DMises_Weekends%26pcampaignid%3DMKT-na-all-co-pr-mu-pod-16" target="_blank">Google Play</a>, <a href="https://open.spotify.com/show/4VzJaNGY0inLS5Hxx5Mdx4">Spotify</a>, or <a href="https://mises.org/itunes/434" target="_blank">via RSS</a>.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/xoo66ZUpExI" height="1" width="1" alt=""/>Jeff Deist, Andy Duncan<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/static-page/img/Human%20Action%20Podcast_750x516_20190304.jpg?itok=1Twpi9lF" width="240" alt="The Human Action Podcast" title="The Human Action Podcast" />46507May 20, 2019 - 2:15 PMFront page feedno The Human Action Podcast reviews another overlooked classic by Mises: The Anti-Capitalistic Mentality. This book takes no prisoners, showing how envy motivates progressive and conservative intellectuals who fear dynamic capitalism. The real reactionariesJeff Deist, Andy Duncan The Human Action Podcast reviews another overlooked classic by Mises: The Anti-Capitalistic Mentality. This book takes no prisoners, showing how envy motivates progressive and conservative intellectuals who fear dynamic capitalism. The real reactionaries, according to Mises? Socialists who want to keep everyone stuck at one station in life. Our friend Andy Duncan from Mises UK, who recently reviewed the book, joins the show to discuss. Read the book free here, or enter code "HAPOD" in our bookstore to buy a softcover for only $5! Subscribe and listen on iTunes, YouTube, Stitcher, Soundcloud, Google Play, Spotify, or via RSS. Austrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46507New Deal and Cold War: The Link of State Dominationhttp://feedproxy.google.com/~r/MisesMedia/~3/F0SZf1I7mTw/6194
<p>[<a href="https://mises.org/library/betrayal-american-right-0"><em>This article is excerpted from chapter 9 of </em>The Betrayal of the American Right.</a>]</p>
<p>One of the most brilliant and forceful attacks on Cold War foreign policy in this era came from the pen of the veteran conservative and free-market publicist Garet Garrett. In his pamphlet "The Rise of Empire," published in 1952, Garrett began by declaring: "We have crossed the boundary that lies between Republic and Empire."</p>
<p>Linking his thesis with his pamphlet of the 1930s, "The Revolution Was," denouncing the advent of domestic executive and statist despotism within the republican form under the New Deal, Garrett saw once more a "revolution within the form" of the old constitutional republic:</p>
<blockquote><p>After President Truman, alone and without either the consent or knowledge of Congress, had declared war on the Korean aggressor, 7,000 miles away, Congress condoned his usurpation of its exclusive Constitutional power to declare war. More than that, his political supporters in Congress argued that in the modern case that sentence in the Constitution conferring upon Congress the sole power to declare war was obsolete. …</p>
<p>Mr. Truman's supporters argued that in the Korean instance his act was defensive and therefore within his powers as Commander-in-Chief. In that case, to make it Constitutional, he was legally obliged to ask Congress for a declaration of war afterward. This he never did. For a week Congress relied upon the papers for news of the country's entry into war; then the President called a few of its leaders to the White House and told them what he had done….</p>
<p>A few months later Mr. Truman sent American troops to Europe to join an international army, and did it not only without a law, without even consulting Congress, but challenged the power of Congress to stop it.<a class="see-footnote" id="footnoteref1_6u6t87n" title="Garet Garrett, The People's Pottage (Caldwell, Id.: Caxton Printers, 1953), pp. 122–23." href="#footnote1_6u6t87n">1</a></p></blockquote>
<p>Garrett noted that the Senate Foreign Relations Committee then asked the State Department to set forth the position of the executive branch on the powers of the president to send troops abroad. The State Department declared that "constitutional doctrine has been largely molded by practical necessities. Use of the congressional power to declare war, for example, has fallen into abeyance because wars are no longer declared in advance."</p>
<p>Garrett added that "Caesar might have said it to the Roman Senate," and that this statement "stands as a forecast of executive intentions, a manifestation of the executive mind, a mortal challenge to the parliamentary principle."</p>
<p>What, then, were the hallmarks of empire? The first requisite, Garrett declared, was that "the executive power of government shall be dominant." For</p>
<blockquote><p>what Empire needs above all in government is an executive power that can make immediate decisions, such as a decision in the middle of the night by the President to declare war on the aggressor in Korea.<a class="see-footnote" id="footnoteref2_f9fopy2" title="Ibid., p. 129." href="#footnote2_f9fopy2">2</a></p></blockquote>
<p>In previous years, he added, it was assumed that the function of the Congress was to speak for the American people. But now</p>
<blockquote><p>it is the President, standing at the head of the Executive Government, who says: "I speak for the people" or "I have a mandate from the people." … Now much more than Congress, the President acts directly upon the emotions and passions of the people to influence their thinking. As he controls Executive Government, so he controls the largest propaganda machine in the world. The Congress has no propaganda apparatus at all and continually finds itself under pressure from the people who have been moved for or against something by the ideas and thought material broadcast in the land by the administrative bureaus in Washington.</p></blockquote>
<p>The powers of the executive are aggrandized by delegation from Congress, by continual reinterpretation of the language of the Constitution, by the appearance of a large number of administrative bureaus within the executive, by usurpation, and as a natural corollary of the country's intervening more and more into foreign affairs.</p>
<p>A second hallmark of the existence of empire, continued Garrett, is that "[d]omestic policy becomes subordinate to foreign policy." This is what happened to Rome, and to the British Empire. It is also happening to us, for</p>
<blockquote><p>as we convert the nation into a garrison state to build the most terrible war machine that has ever been imagined on earth, every domestic policy is bound to be conditioned by our foreign policy. The voice of government is saying that if our foreign policy fails we are ruined. It is all or nothing. Our survival as a free nation is at hazard. That makes it simple, for in that case there is no domestic policy that may not have to be sacrificed to the necessities of foreign policy — even freedom…. If the cost of defending not ourselves alone but the whole non-Russian world threatens to wreck our solvency, still we must go on.<a class="see-footnote" id="footnoteref3_sgoa6or" title="Ibid., p. 139." href="#footnote3_sgoa6or">3</a></p></blockquote>
<p>Garrett concluded,</p>
<blockquote><p>We are no longer able to choose between peace and war. We have embraced perpetual war…. Wherever and whenever the Russian aggressor attacks, in Europe, Asia, or Africa, there we must meet him. We are so committed by the Truman Doctrine, by examples of our intention, by the global posting of our armed forces, and by such formal engagements as the North Atlantic Treaty and the Pacific Pact.</p></blockquote>
<p>And, furthermore,</p>
<blockquote><p>Let it be a question of survival, and how relatively unimportant are domestic policies — touching, for example, the rights of private property, when if necessary, all private property may be confiscated; or touching individual freedom, when, if necessary, all labor may be conscripted…. The American mind is already conditioned.</p></blockquote>
<p>Garrett then — himself prophetically — pointed to the keen prophetic insight of a <em>New York Times</em> editorial of October 31, 1951, in detailing the permanent changes in American life wrought by the Korean War. Wrote the <em>Times</em>:</p>
<blockquote><p>We are embarking on a partial mobilization for which about a hundred billion dollars have been already made available. We have been compelled to activate and expand our alliances at an ultimate cost of some twenty-five billion dollars, to press for rearmament of former enemies and to scatter our own forces at military bases throughout the world. Finally, we have been forced not only to retain but to expand the draft and to press for a system of universal military training which will affect the lives of a whole generation. The productive effort and the tax burden resulting from these measures are changing the economic pattern of the land.</p>
<p>What is not so clearly understood, here or abroad, is that these are not temporary measures for a temporary emergency but rather the beginning of a whole new military status for the United States, which seems certain to be with us for a long time to come.</p></blockquote>
<p>Garrett, endorsing this insight, added sardonically that "probably never before in any history, could so dire a forecast have been made in these level tones" — tones made possible by the myth that this new state of affairs was "not the harvest of our foreign policy but Jehovah acting through the Russians to afflict us — and nobody else responsible."<a class="see-footnote" id="footnoteref4_99gt6r3" title="Ibid., pp. 140–41." href="#footnote4_99gt6r3">4</a></p>
<p>A third brand of empire, continued Garrett, is the "ascendancy of the military mind." Garrett noted that the great symbol of the American military mind is the Pentagon Building in Washington, built during World War II, as a "forethought of perpetual war." There at the Pentagon, "global strategy is conceived; there, nobody knows how, the estimates of what it will cost are arrived at; and surrounding it is our own iron curtain." The Pentagon allows the public to know only the information that it wills it to learn;</p>
<blockquote><p>All the rest is stamped "classified" or "restricted," in the name of national security, and Congress itself cannot get it. That is as it must be of course; the most important secrets of Empire are military secrets.</p></blockquote>
<p>Garrett went on to quote the devastating critique of our garrison state by General Douglas MacArthur:</p>
<blockquote><p>Talk of imminent threat to our national security through the application of external force is pure nonsense…. Indeed, it is a part of the general patterns of misguided policy that our country is now geared to an arms economy which was bred in an artificially induced psychosis of war hysteria and nurtured upon an incessant propaganda of fear. While such an economy may produce a sense of seeming prosperity for the moment, it rests on an illusionary foundation of complete unreliability and renders among our political leaders almost a greater fear of peace than is their fear of war.</p></blockquote>
<p>Garrett then interprets that quotation as follows:</p>
<blockquote><p>War becomes an instrument of domestic policy…. [The government may] increase or decrease the tempo of military expenditures, as the planners decide that what the economy needs is a little more inflation or a little less…. And whereas it was foreseen that when Executive Government is resolved to control the economy it will come to have a vested interest in the power of inflation, so now we may perceive that it will come also to have a kind of proprietary interest in the institution of perpetual war.<a class="see-footnote" id="footnoteref5_ah273wp" title="Ibid., pp. 148–49." href="#footnote5_ah273wp">5</a></p></blockquote>
<p>A fourth mark of empire, continued Garrett, is "a system of satellite nations." We speak only of Russian "satellites," and with contempt, but "we speak of our own satellites as allies and friends or as freedom loving nations." The meaning of satellite is a "hired guard." As Garrett notes,</p>
<blockquote><p>When people say we have lost China or that if we lose Europe it will be a disaster, what do they mean? How could we lose China or Europe, since they never belonged to us? What they mean is that we have lost or may lose a following of dependent people who act as an outer guard.</p></blockquote>
<p>Armed with a vast array of satellites, we then find that "for any one of them to involve us in war it is necessary only for the Executive Power in Washington to decide that its defense is somehow essential to the security of the United States." The system had its origins in the Lend-Lease Act of 1941. Garrett concludes that the imperial center is pervaded by a fear of standing alone in the world, without satellites.</p>
<blockquote><p>Fear at last assumes the phase of a patriotic obsession. It is stronger than any political party…. The basic conviction is simple. We cannot stand alone. A capitalistic economy, though it possesses half the industrial power of the whole world, cannot defend its own hemisphere. It may be able to save the world; alone it cannot save itself. It must have allies. Fortunately, it is able to buy them, bribe them, arm them, feed and clothe them; it may cost us more than we can afford, yet we must have them or perish.<a class="see-footnote" id="footnoteref6_zs56q0j" title="Ibid., pp. 150, 155." href="#footnote6_zs56q0j">6</a></p></blockquote>
<p>The final hallmark of empire is "a complex of vaunting and fear." Here Garrett cuts to the heart of the imperial psychology. On the one hand is vaunting:</p>
<blockquote><p>The people of Empire … are mighty. They have performed prodigious works. … So those must have felt who lived out the grandeur that was <em>Rome</em>. So the British felt while they ruled the world. So now Americans feel. As we assume unlimited political liabilities all over the world, as billions in multiples of ten are voted for the ever expanding global intention, there is only scorn for the one who says: "We are not infinite." The answer is: "What we will to do, that we can do."</p></blockquote>
<p>But in addition to vaunting is the fear:</p>
<blockquote><p>Fear of the barbarian. Fear of standing alone…. A time comes when the guard itself, that is, your system of satellites, is a source of fear. Satellites are often willful and the more you rely upon them the more willful and demanding they are. There is, therefore, the fear of offending them…. How will they behave when the test comes? — when they face … the terrible reality of becoming the European battlefield whereon the security of the United States shall be defended? If they falter or fail, what will become of the weapons with which we have supplied them?<a class="see-footnote" id="footnoteref7_8xaq4pq" title="Ibid., pp. 155–57." href="#footnote7_8xaq4pq">7</a></p></blockquote>
<p>Having concluded that we now have all the hallmarks of empire, Garrett then points out that the United States, like previous empires, feels itself "a prisoner of history." Americans feel somehow obliged to play their supposed role on the world stage. For beyond fear lies "collective security" and beyond that lies "a greater thought." In short,</p>
<blockquote><p>It is our turn.</p>
<p>Our turn to do what?</p>
<p>Our turn to assume the responsibilities of moral leadership in the world.</p>
<p>Our turn to maintain a balance of power against the forces of evil everywhere — in Europe and Asia and Africa, in the Atlantic and in the Pacific, by air and by sea — evil in this case being the Russian barbarian.</p>
<p>Our turn to keep the peace of the world.</p>
<p>Our turn to save civilization.</p>
<p>Our turn to serve mankind.</p>
<p>But this is the language of Empire. The Roman Empire never doubted that it was the defender of civilization. Its good intentions were peace, law and order. The Spanish Empire added salvation. The British Empire added the noble myth of the white man's burden. We have added freedom and democracy. Yet the more that may be added to it the more it is the same language still. A language of power.<a class="see-footnote" id="footnoteref8_z50x3fh" title="Ibid., pp. 158–59." href="#footnote8_z50x3fh">8</a></p></blockquote>
<p>Garrett ends his splendid work by calling for the recapture of the "lost terrain" of liberty and republicanism from executive tyranny and empire. But, as he pointed out, we must face the fact</p>
<blockquote><p>that the cost of saving the Republic may be extremely high. It could be relatively as high as the cost of setting it up in the first place, one hundred and seventy-five years ago, when love of political liberty was a mighty passion, and people were willing to die for it…. [D]eceleration will cause a terrific shock. Who will say, "Now?" Who is willing to face the grim and dangerous realities of deflation and depression? … No doubt the people know they can have their Republic back if they want it enough to fight for it and to pay the price. The only point is that no leader has yet appeared with the courage to make them choose.<a class="see-footnote" id="footnoteref9_xy0y61t" title="Ibid., pp. 173–74." href="#footnote9_xy0y61t">9</a></p></blockquote>
<p>No less enthusiastic was the devotion to peace and the opposition to the Korean War and militarism on the part of the more narrowly libertarian wing of the Old Right movement. Thus, Leonard Read published a powerful pamphlet, "Conscience on the Battlefield" (1951), in which he imagined himself as a young American soldier dying on a battlefield in Korea and engaged in a dialogue with his own conscience. The conscience informs the soldier that</p>
<blockquote><p>while in many respects you were an excellent person, the record shows that you killed many men — both Korean and Chinese — and were also responsible for the death of many women and children during this military campaign.</p></blockquote>
<p>The soldier replies that the war was "good and just," that "we had to stop Communist aggression and the enslavement of people by dictators." Conscience asks him, "Did you kill these people as an act of self-defense? Were they threatening your life or your family? Were they on your shores, about to enslave you?" The soldier again replies that he was serving the clever US foreign policy, which anticipates our enemies' actions by defeating them first overseas.</p>
<p>Read's conscience then responds:</p>
<blockquote><p>Governments and such are simply phrases, mere abstractions behind which persons often seek to hide their actions and responsibilities…. In the Temple of Judgment which you are about to enter, Principles only are likely to be observed. It is almost certain that you will find there no distinction between nationalities or between races…. A child is a child, with as much right to an opportunity for Self-realization as you. To take a human life — at whatever age, or of any color — is to take a human life…. According to your notions, no one person is responsible for the deaths of these people. Yet they were destroyed. Seemingly, you expect collective arrangements such as "the army" or "the government" to bear your guilt.<a class="see-footnote" id="footnoteref10_xmam75i" title="Leonard F. Read, Conscience on the Battlefield (Irvington-on-Hudson, N.Y.: Foundation for Economic Education, 1951), pp. 8–11. It is indicative of the decay of the older libertarian movement and of FEE that Read's pamphlet was never included in FEE's Essays on Liberty and was allowed to disappear rather quickly from circulation." href="#footnote10_xmam75i">10</a></p></blockquote>
<p>On the matter of guilt, the conscience adds that</p>
<blockquote><p>there can be no distinction between those who do the shooting and those who aid the act — whether they aid it behind the lines by making the ammunition, or by submitting to the payment of taxes for war. Moreover, the guilt would appear to be even greater on the part of those who resorted to the coercive power of government to get you to sacrifice your home, your fortune, your chance of Self-realization, your life — none of which sacrifices do they themselves appear willing to make.</p></blockquote>
<p>In introducing his pamphlet, Read wrote, "War is liberty's greatest enemy, and the deadly foe of economic progress." Seconding that view was libertarian leader F.A. "Baldy" Harper, in a FEE pamphlet, "In Search of Peace," published in the same year. There Harper wrote,</p>
<blockquote><p>Charges of pacifism are likely to be hurled at anyone who in troubled times raises any question about the race into war. If pacifism means embracing the objective of peace, I am willing to accept the charge. If it means opposing all aggression against others, I am willing to accept the charge also. It is now urgent in the interest of liberty that many persons become "peacemongers…"</p>
<p>So the nation goes to war, and while war is going on, the real enemy [the idea of slavery] — long ago forgotten and camouflaged by the processes of war — rides on to victory in both camps…. Further evidence that in war the attack is not leveled at the real enemy is the fact that we seem never to know what to do with "victory" … Are the "liberated peoples to be shot, or all put in prison camps, or what? Is the national boundary to be moved? Is there to be further destruction of the property of the defeated? Or what? … Nor can the ideas of [Karl Marx] be destroyed today by murder or suicide of their leading exponent, or of any thousands or millions of the devotees…. Least of all can the ideas of Karl Marx be destroyed by murdering innocent victims of the form of slavery he advocated, whether they be conscripts in armies or victims caught in the path of battle.<a class="see-footnote" id="footnoteref11_n5rkqs3" title="F.A. Harper, In Search of Peace (Irvington-on-Hudson, N.Y.: Foundation for Economic Education, 1951), pp. 3, 23–25; reprinted by the Institute for Humane Studies, 1971." href="#footnote11_n5rkqs3">11</a></p></blockquote>
<p>Harper then added that Russia was supposed to be the enemy, because our enemy was Communism.</p>
<blockquote><p>But if it is necessary for us to embrace all these socialist-communist measures in order to fight a nation that has adopted them — because they have adopted these measures — why fight them? Why not join them in the first place and save all the bloodshed? … There is no sense in conjuring up in our minds a violent hatred against people who are the victims of communism in some foreign nation, when the same governmental shackles are making us servile to illiberal forces at home.</p></blockquote>
<p>Dean Russell, another staff member at FEE, added to the antimilitarist barrage:</p>
<blockquote><p>Those who advocate the "temporary loss" of our freedom in order to preserve it permanently are advocating only one thing: the abolition of liberty. In order to fight a form of slavery abroad, they advocate a form of bondage at home! However good their intentions may be, these people are enemies of your freedom and my freedom; and I fear them far more than I fear any potential Russian threat to my liberty. These sincere but highly emotional patriots are clear and present threats to freedom; the Russians are still thousands of miles away.<a class="see-footnote" id="footnoteref12_k9j04ix" title="Dean Russell, "The Conscription Idea," Ideas on Liberty (May 1955): 42." href="#footnote12_k9j04ix">12</a></p></blockquote>
<p>The Russians would only attack us, Russell pointed out, "for either of two reasons: fear of our intentions or retaliation to our acts." The Russians' fear would</p>
<blockquote><p>evaporate if we pulled our troops and military commitments back into the Western Hemisphere and kept them here…. As long as we keep troops on Russia's borders, the Russians can be expected to act somewhat as we would act if Russia were to station troops in Guatemala or Mexico — even if those countries wanted the Russians to come in!</p></blockquote>
<p>Dean Russell concluded his critique of American foreign policy:</p>
<blockquote><p>I can see no more logic in fighting Russia over Korea or Outer Mongolia, than in fighting England over Cyprus, or France over Morocco. … The historical facts of imperialism and spheres of influence are not sufficient reasons to justify the destruction of freedom within the United States by turning ourselves into a permanent garrison state and stationing conscripts all over the world. We are rapidly becoming a caricature of the thing we profess to hate.</p></blockquote>
<p>My own reaction to the onset of the Korean War was impassioned and embittered, and I wrote a philippic to an uncomprehending liberal friend which I believe holds up all too well in the light of the years that followed:</p>
<blockquote><p>I come to bury Liberty, not to praise it; how could I praise it when the noble Brutus — Social Democracy — has come into full flower? … What had we under the regime of Liberty? More or less, we had freedom to say whatever we pleased, to work wherever we wanted, to save and invest capital, to travel wherever we pleased, we had peace. These things were all very well in their day, but now we have Social Democracy…. Social Democracy has the draft, so all of us can fight for lasting peace and democracy all over the world, rationing, price control, allocation … the labor draft, so we can all serve society at our best capacities, heavy taxes, inflationary finance, black markets … healthy "economic expansion." Best of all, we shall have permanent war. The trouble, as we all know, with the previous wars is that they ended so quickly…. But now it looks as if that mistake has been rectified. We can … proclaim as our objective the occupation of Russia for twenty years to really educate her people in the glorious principles of our own Social Democracy. And if we really want to battle for Democracy, let's try to occupy and educate China for a couple of generations. That should keep us busy for a while.</p>
<p>In the last war, we were hampered by a few obstructionist, isolationist, antediluvians, who resisted such salutary steps as a draft of all labor and capital, and total planning for mobilization by benevolent politicians, economists, and sociologists. But under our permanent war setup, we can easily push this program through. If anyone objects, we can accuse him of giving aid and comfort to the Commies. The Democrats have already accused the reactionary obstructionist [Senator] Jenner (R., Ind.) of "following the Stalinist line."</p>
<p>Yes, the obstructionists are licked. Social Democracy has little to fear from them. Whoever the genius was who thought up the permanent war idea, you've got to hand it to him. We can look forward to periods of National Unity, of a quintupling of the National Income, etc. There is a little fly in the ointment that some obstructionists may mention — the boys actually doing the fighting may have some objections. But we can correct that with a $300 billion "Truth" campaign headed, say, by Archibald MacLeish, so they will know what they are fighting for. And, we've got to impose equivalent sacrifices on the home front, so our boys will know that things are almost as tough at home….</p>
<p>There you have it. The Outlines of the Brave New World of Democratic Socialism. Liberty is a cheap price to pay. I hope you'll like it.<a class="see-footnote" id="footnoteref13_wn5jb59" title="The only response of my liberal friend was to wonder why I had written him a letter sounding like the statement of "some business organization."" href="#footnote13_wn5jb59">13</a></p></blockquote>
<ul class="footnotes"><li class="footnote" id="footnote1_6u6t87n"><a class="footnote-label" href="#footnoteref1_6u6t87n">1.</a> Garet Garrett, <em><a href="http://store.mises.org/Peoples-Pottage-The-P426C0.aspx">The People's Pottage</a></em> (Caldwell, Id.: Caxton Printers, 1953), pp. 122–23.</li>
<li class="footnote" id="footnote2_f9fopy2"><a class="footnote-label" href="#footnoteref2_f9fopy2">2.</a> Ibid., p. 129.</li>
<li class="footnote" id="footnote3_sgoa6or"><a class="footnote-label" href="#footnoteref3_sgoa6or">3.</a> Ibid., p. 139.</li>
<li class="footnote" id="footnote4_99gt6r3"><a class="footnote-label" href="#footnoteref4_99gt6r3">4.</a> Ibid., pp. 140–41.</li>
<li class="footnote" id="footnote5_ah273wp"><a class="footnote-label" href="#footnoteref5_ah273wp">5.</a> Ibid., pp. 148–49.</li>
<li class="footnote" id="footnote6_zs56q0j"><a class="footnote-label" href="#footnoteref6_zs56q0j">6.</a> Ibid., pp. 150, 155.</li>
<li class="footnote" id="footnote7_8xaq4pq"><a class="footnote-label" href="#footnoteref7_8xaq4pq">7.</a> Ibid., pp. 155–57.</li>
<li class="footnote" id="footnote8_z50x3fh"><a class="footnote-label" href="#footnoteref8_z50x3fh">8.</a> Ibid., pp. 158–59.</li>
<li class="footnote" id="footnote9_xy0y61t"><a class="footnote-label" href="#footnoteref9_xy0y61t">9.</a> Ibid., pp. 173–74.</li>
<li class="footnote" id="footnote10_xmam75i"><a class="footnote-label" href="#footnoteref10_xmam75i">10.</a> Leonard F. Read, <em><a href="http://www.lewrockwell.com/orig3/read1.html">Conscience on the Battlefield</a></em> (Irvington-on-Hudson, N.Y.: Foundation for Economic Education, 1951), pp. 8–11. It is indicative of the decay of the older libertarian movement and of FEE that Read's pamphlet was never included in FEE's <em>Essays on Liberty</em> and was allowed to disappear rather quickly from circulation.</li>
<li class="footnote" id="footnote11_n5rkqs3"><a class="footnote-label" href="#footnoteref11_n5rkqs3">11.</a> F.A. Harper, <em><a href="http://www.lewrockwell.com/orig6/harper2.html">In Search of Peace</a></em> (Irvington-on-Hudson, N.Y.: Foundation for Economic Education, 1951), pp. 3, 23–25; reprinted by the Institute for Humane Studies, 1971.</li>
<li class="footnote" id="footnote12_k9j04ix"><a class="footnote-label" href="#footnoteref12_k9j04ix">12.</a> Dean Russell, <a href="http://www.fee.org/publications/the-freeman/article.asp?aid=26">"The Conscription Idea,"</a> <em>Ideas on Liberty</em> (May 1955): 42.</li>
<li class="footnote" id="footnote13_wn5jb59"><a class="footnote-label" href="#footnoteref13_wn5jb59">13.</a> The only response of my liberal friend was to wonder why I had written him a letter sounding like the statement of "some business organization."</li>
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/F0SZf1I7mTw" height="1" width="1" alt=""/>Murray N. Rothbard<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/social-media/flag2.PNG?itok=PHS4tVWQ" width="240" alt="flag2.PNG" />6194May 20, 2019 - 2:00 PMFront page feedno [This article is excerpted from chapter 9 of The Betrayal of the American Right.] One of the most brilliant and forceful attacks on Cold War foreign policy in this era came from the pen of the veteran conservative and free-market publicist Garet Garrett.Murray N. Rothbard [This article is excerpted from chapter 9 of The Betrayal of the American Right.] One of the most brilliant and forceful attacks on Cold War foreign policy in this era came from the pen of the veteran conservative and free-market publicist Garet Garrett. In his pamphlet "The Rise of Empire," published in 1952, Garrett began by declaring: "We have crossed the boundary that lies between Republic and Empire." Linking his thesis with his pamphlet of the 1930s, "The Revolution Was," denouncing the advent of domestic executive and statist despotism within the republican form under the New Deal, Garrett saw once more a "revolution within the form" of the old constitutional republic: After President Truman, alone and without either the consent or knowledge of Congress, had declared war on the Korean aggressor, 7,000 miles away, Congress condoned his usurpation of its exclusive Constitutional power to declare war. More than that, his political supporters in Congress argued that in the modern case that sentence in the Constitution conferring upon Congress the sole power to declare war was obsolete. … Mr. Truman's supporters argued that in the Korean instance his act was defensive and therefore within his powers as Commander-in-Chief. In that case, to make it Constitutional, he was legally obliged to ask Congress for a declaration of war afterward. This he never did. For a week Congress relied upon the papers for news of the country's entry into war; then the President called a few of its leaders to the White House and told them what he had done…. A few months later Mr. Truman sent American troops to Europe to join an international army, and did it not only without a law, without even consulting Congress, but challenged the power of Congress to stop it.1 Garrett noted that the Senate Foreign Relations Committee then asked the State Department to set forth the position of the executive branch on the powers of the president to send troops abroad. The State Department declared that "constitutional doctrine has been largely molded by practical necessities. Use of the congressional power to declare war, for example, has fallen into abeyance because wars are no longer declared in advance." Garrett added that "Caesar might have said it to the Roman Senate," and that this statement "stands as a forecast of executive intentions, a manifestation of the executive mind, a mortal challenge to the parliamentary principle." What, then, were the hallmarks of empire? The first requisite, Garrett declared, was that "the executive power of government shall be dominant." For what Empire needs above all in government is an executive power that can make immediate decisions, such as a decision in the middle of the night by the President to declare war on the aggressor in Korea.2 In previous years, he added, it was assumed that the function of the Congress was to speak for the American people. But now it is the President, standing at the head of the Executive Government, who says: "I speak for the people" or "I have a mandate from the people." … Now much more than Congress, the President acts directly upon the emotions and passions of the people to influence their thinking. As he controls Executive Government, so he controls the largest propaganda machine in the world. The Congress has no propaganda apparatus at all and continually finds itself under pressure from the people who have been moved for or against something by the ideas and thought material broadcast in the land by the administrative bureaus in Washington. The powers of the executive are aggrandized by delegation from Congress, by continual reinterpretation of the language of the Constitution, by the appearance of a large number of administrative bureaus within the executive, by usurpation, and as a natural corollary of the country's intervening more and more into foreign affairs. A second hallmark of the existence of empire, continued Garrett, is that "[d]omestic policy becomes subordinate to foreAustrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/6194The Balance-of-Payments Mythhttp://feedproxy.google.com/~r/MisesMedia/~3/KjgTlkzQlNE/46505
<p>In March, the US trade account balance stood at a deficit of $ 50 billion against a deficit of $49.28 billion in February and a deficit of $47.4 billion in March last year.</p>
<p>Most commentators consider the trade account balance as the single most important piece of information regarding the health of the economy.</p>
<p>According to the widely accepted view, a surplus on the trade account is considered as a positive development while a deficit is perceived in a negative light. What is the reason for this?</p>
<p>By popular thinking, the key to economic growth is demand for goods and services. Increases and decreases in demand are behind the rises and declines in the economy’s production of goods. Hence, in order to keep the economy going economic policies must pay close attention to the overall demand.</p>
<p>Now, part of the demand for domestic products emanates from overseas. The accommodation of this type of demand is labeled exports. Likewise, local residents exercise demand for goods and services produced overseas, which is labeled import.</p>
<p>It is held that while an increase in export strengthens the demand for domestic output, an increase in import weakens the demand. Exports, according to this way of thinking, are a factor that contributes to economic growth while imports detract from the growth of the economy. Hence whenever imports exceed exports a trade deficit emerges and this is bad news for economic activity as depicted by the gross domestic product (GDP).</p>
<p>The deficit is viewed as a symptom of bad economic health. Subsequently, by the popular way of thinking what is required is a boost in exports and a curtailing of imports in order to reduce the deficit.</p>
<p>This, it is held, will lead to improved economic health. The popular view maintains that it is the role of the government and the central bank to introduce a suitable mix of policies, which will guide the economy along the path towards a “favorable” trade account balance.</p>
<p>As a result of the so-called unfavorable trade account balance, the US has recently lifted its tariffs on imports from various countries, in particular China, in order to make the trade balance “more favorable.” However, does it all make sense?</p>
<h4>Trade Account Balance In a Market Economy</h4>
<p>In a market economy, each individual sells goods and services for money and uses money to buy desired goods and services. The goods and services sold by an individual could be termed "export," while the goods and services bought could be termed "import." The record of such monetary exchanges for any period could be labeled as the trade account balance.</p>
<p>In a free market economy, individuals’ decisions regarding the selling and the buying of goods and services i.e. export and import is made voluntarily, otherwise it would not be undertaken. The emergence of an exchange between individuals implies that they expect to benefit.</p>
<p>Whenever an individual plans to import more than he exports, the shortfall will be balanced either by running down existing savings or by borrowing. The creditor who supplies the required funds does so because he expects to profit from that.</p>
<p>The current practice of lumping individual’s trade account balances into a national trade account balance is of little relevance to businesses.</p>
<p>What possible interest can a business have with the national trade account balance? Will it assist him, in his business conduct? Since there is no such thing as the US PTY Ltd that can be bought or sold in the market the national trade account balance, will be of no use to businesses.</p>
<p>While the national trade account balance is of little economic significance and is a sterile concept, individual or company trade account balances are real things that carry economic significance.</p>
<p>For instance, the trade account statement of a particular company could be of assistance to various present and potential investors in that company. Again, this is not the case with the national trade account balance.</p>
<p>While the national trade account balance is a harmless definition, the government reaction to it produces harmful effects. Government policies that are aimed at attaining a more “favorable” trade account balance by means of monetary and fiscal policies disrupt the harmony in the market place. This disruption leads to a shift of scarce resources away from the production of most desired (by consumers) goods and services, towards the production of less desirable goods and services.</p>
<p>Furthermore it is not "the US" that exports wheat, but a particular farmer or a group of farmers who export wheat. They are engaged in the export of wheat because they expect to profit from that.</p>
<p>Similarly, it is not "the US" that imports Japanese electrical appliances, but an individual from the US or a group of Americans. They import these appliances because they believe that a profit can be made.</p>
<p>If the national trade account balance is an important indicator of the economic health, as various commentators imply, one is then tempted to suggest that it would be a sensible idea to have trade account balances of cities or regions. After all, if we could detect the economic malaise in a particular city or a region, the treatment of the national malaise could be made much easier.</p>
<p>Imagine then that the economists in New York have discovered that their city has a massive trade account deficit with Chicago. Does this mean that the city of New York authority should step in to enforce the reduction of the deficit by banning imports from Chicago?</p>
<p>Luckily, we do not have inter-city trade account balances and it seems that no one is concerned with this issue. Yet the principle of the inter-city trade account balances is also valid for the national trade account balance.</p>
<p>The concern expressed by many commentators that an “unfavorable” trade account balance is bad for the economy is questionable. No individual or group of individuals can suffer as a result of “unfavorable” trade account balance. An important reason for suffering can emerge from a drop in incomes of individuals because of government tampering with the economy.</p>
<p>Again, the enthusiasm and excitement revealed by the financial markets towards the trade account data is not because of its importance, but because of the expected response of the government and the central bank to the data.</p>
<p>Economists and analysts spend much of their time guessing the likely response of the government or the central bank to a particular trade account balance. Various methods are employed to forecast the trade gap and its implications on the government’s reaction. Sophisticated econometric models are used to produce various possible outcomes. However, all of that is barely related to true economic fundamentals that from time to time awaken analysts by means of sudden shocks.</p>
<p>The fallacy of the national trade account balance concept is also relevant to the national foreign debt. There is no such thing as the national foreign debt since nations as such do not borrow or lend only individuals can do that.</p>
<p>Consequently, if an American lends money to an Australian the entire transaction is their own private affair and is not of concern to any other. Both the American and the Australian are expecting to benefit from this transaction.</p>
<p>Lumping individuals’ foreign debt into the total national foreign debt is thus also another questionable practice. What is this total supposed to mean? Who owns this debt? What about all those individuals who do not have foreign debt? Should they also be responsible for the national foreign debt?</p>
<p>The only situation in which individual Australians should be concerned with foreign debt is when the government incurs the debt. The government is not wealth generating unit and as such derives its livelihood from the private sector.</p>
<p>Consequently, any foreign government debt incurred means that the private sector will have to foot the bill sometime in the future.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/KjgTlkzQlNE" height="1" width="1" alt=""/>Frank Shostak<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/trade_0.PNG?itok=-MO4j5p2" width="240" alt="trade_0.PNG" />46505May 20, 2019 - 11:00 AMFront page feedno In March, the US trade account balance stood at a deficit of $ 50 billion against a deficit of $49.28 billion in February and a deficit of $47.4 billion in March last year. Most commentators consider the trade account balance as the single most importantFrank Shostak In March, the US trade account balance stood at a deficit of $ 50 billion against a deficit of $49.28 billion in February and a deficit of $47.4 billion in March last year. Most commentators consider the trade account balance as the single most important piece of information regarding the health of the economy. According to the widely accepted view, a surplus on the trade account is considered as a positive development while a deficit is perceived in a negative light. What is the reason for this? By popular thinking, the key to economic growth is demand for goods and services. Increases and decreases in demand are behind the rises and declines in the economy’s production of goods. Hence, in order to keep the economy going economic policies must pay close attention to the overall demand. Now, part of the demand for domestic products emanates from overseas. The accommodation of this type of demand is labeled exports. Likewise, local residents exercise demand for goods and services produced overseas, which is labeled import. It is held that while an increase in export strengthens the demand for domestic output, an increase in import weakens the demand. Exports, according to this way of thinking, are a factor that contributes to economic growth while imports detract from the growth of the economy. Hence whenever imports exceed exports a trade deficit emerges and this is bad news for economic activity as depicted by the gross domestic product (GDP). The deficit is viewed as a symptom of bad economic health. Subsequently, by the popular way of thinking what is required is a boost in exports and a curtailing of imports in order to reduce the deficit. This, it is held, will lead to improved economic health. The popular view maintains that it is the role of the government and the central bank to introduce a suitable mix of policies, which will guide the economy along the path towards a “favorable” trade account balance. As a result of the so-called unfavorable trade account balance, the US has recently lifted its tariffs on imports from various countries, in particular China, in order to make the trade balance “more favorable.” However, does it all make sense? Trade Account Balance In a Market Economy In a market economy, each individual sells goods and services for money and uses money to buy desired goods and services. The goods and services sold by an individual could be termed "export," while the goods and services bought could be termed "import." The record of such monetary exchanges for any period could be labeled as the trade account balance. In a free market economy, individuals’ decisions regarding the selling and the buying of goods and services i.e. export and import is made voluntarily, otherwise it would not be undertaken. The emergence of an exchange between individuals implies that they expect to benefit. Whenever an individual plans to import more than he exports, the shortfall will be balanced either by running down existing savings or by borrowing. The creditor who supplies the required funds does so because he expects to profit from that. The current practice of lumping individual’s trade account balances into a national trade account balance is of little relevance to businesses. What possible interest can a business have with the national trade account balance? Will it assist him, in his business conduct? Since there is no such thing as the US PTY Ltd that can be bought or sold in the market the national trade account balance, will be of no use to businesses. While the national trade account balance is of little economic significance and is a sterile concept, individual or company trade account balances are real things that carry economic significance. For instance, the trade account statement of a particular company could be of assistance to various present and potential investors in that company. Again, this is not the case with the national trade account balance. While the national trade account balance is a harAustrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46505Tariffs Are Attacks on Property Rights and Freedomhttp://feedproxy.google.com/~r/MisesMedia/~3/08NfG5QJsCQ/46494
<p>Rothbard wrote in the <em>Libertarian Forum </em>(v. 1, p. 184) that “… libertarians, if they have any personal philosophy beyond freedom from coercion, are supposed to be at the very least individualists.” Indeed, libertarianism holds high the rights and responsibilities of the sovereign individual: the right to self and to justly acquired property and thus the right not to be coerced or arbitrarily restricted; the responsibility for one’s own actions and the moral duty to respect and honor other individuals’ rights.</p>
<p>Yet libertarianism, or at least a relatively large subset of proponents of libertarianism, has taken a strange collectivist turn in the recent years. This is evident in a number of issues, such as free trade, where libertarians used to be in agreement in principle, albeit not necessarily in all the details or the applications of those principles. In contrast, this new turn argues from a different starting point. Rather than the individual’s rights, the starting point for this group is instead a notion of the individual’s collective belonging and identity (such as one’s country or ethnicity).</p>
<p>There has of course never been a problem for libertarians to recognize individuals for who they are, or choose to be, and thus within their preferred social and cultural context. No man is an island, and as social beings we are embedded in a context of community, culture, and tradition. The distinction between individualist and collectivist is not either-or, but which is primary: for collectivists, the individual is subjected to the will of the collective (or, in reality, the will of its leadership); for individualists, the collective has no right of its own but is subject to the individual’s choice to associate. For obvious reasons, the analysis of any state of affairs from a collectivist point of view is different than that from an individualist point of view.</p>
<p>The issue of free trade illustrates this clearly. Libertarians used to be universally and uninhibitedly for free trade. Whether domestically or across borders, voluntary exchange serves individuals best—and any restriction thereof is a violation of their rights. Thus, any restrictions should always be abolished, and the sooner the better.</p>
<p>Granted, reality is somewhat more complex. As I discuss in <em> <a href="https://rowman.com/ISBN/9780739194577/The-Seen-the-Unseen-and-the-Unrealized-How-Regulations-Affect-Our-Everyday-Lives"> The Seen, the Unseen, and the Unrealized: How Regulations Affect Our Everyday Lives</a></em>, whenever the state regulates economic action, there are severe and oftentimes far-reaching distortions of both structure and outcome of market exchange. As libertarians have long recognized, regulations create winners and losers. Also, rolling back individual regulations, while it potentially causes a “freer” market, it will cause a different set of winners and losers. The only truly fair and just economy is one completely devoid of the state’s manipulations, whether those are actively pursued or passively effected.</p>
<p>These complex implications of trade policy were never seen as an argument against deregulation, however. Rather, it is an argument for letting people and businesses exchange without interventions. Less intervention means less distortion, and this is always preferable. This should be preferred even by interventionists, because, as Mises famously recognized<em> </em>in <em>Bureaucracy</em>,</p>
<blockquote><p>Economic interventionism is a self-defeating policy. The individual measures that it applies do not achieve the results sought. They bring about a state of affairs, which—from the viewpoint of its advocates themselves—is much more undesirable than the previous state they intended to alter.</p></blockquote>
<p>In other words, libertarians were free traders and favored any step in the direction of free trade. But this is no longer obvious. Trump’s trade war with China appears to have caused a rift within libertarianism, or at least among those libertarians who eagerly discuss policy online, alongside the individualist/collectivist fault line.</p>
<p>Libertarian-individualists are true to the <em>"</em>traditional" libertarian view that the state should get out of trade altogether and that Trump’s trade war is only harming consumers and the economy. The collectivists instead focus on international trade as a matter of collectivist justice, and, as a result, raise other issues. Among those are the recognition that China (the ‘other’ collective) is engaged in ‘unfair business practices’ by subsidizing and in other ways supporting Chinese (their ‘own’) business and, as part of this, neglecting to enforce international treaties. (A similar argument can, of course, also be made for the US and any other state.)</p>
<p>This is itself no news, as libertarians have always recognized the destructiveness of realpolitik, nation-statism, and the overall distortive nature of interventionism. But the solution from a libertarian-individualist perspective has always been to call for deregulation and free markets—even unilaterally—with the obvious goal to get the state out of trade. That China, for example, subsidizes production so that American and European consumers can buy goods and services at a very low, and possibly below-cost, price is not a problem for anyone but the Chinese. They are, after all, picking up the tab for the low prices we enjoy.</p>
<p>From the collectivist libertarian perspective, the suggested solution is very different—and may even be contrary to traditional libertarian views. In their take, Chinese domestic and international trade policy is not an issue primarily for the Chinese, but threatens ‘our’ businesses and therefore ‘our’ ability to produce goods and services, which can make "us" dependent on Chinese production.</p>
<p>The issue of trade is no longer a matter of the free exchange between private parties, whether individuals or businesses, but a matter of the collective to which these parties ‘belong’. International trade then becomes an issue of ‘national security’ and, the argument goes, it is therefore justified to call on the state to act on “our” behalf. Consequently, Trump’s trade war is seen by this group as a means for "us" to pressure the Chinese to adopt “fair” business practices so that "our" (American and perhaps Western) businesses can compete on the same terms as Chinese companies.</p>
<p>While there are certainly problems involved with an expansionary Chinese state, a <a href="https://mises.org/wire/china-keynesian-monster"> Keynesian monster </a> with grand international ambitions made clear in, among other things, the Belt and Road initiative, it should be fundamentally problematic for libertarians to identify with, and even support, one state against another. Even more so to support a state setting out to restrict and tax trade, whether or not it is intended as a means to pressure (or punish) "them."</p>
<p>The trade war issue appears to cause confusion among the new collectivist breed of libertarians regarding the non-aggression principle. This core principle is what underlies the free trade issue: it is fundamentally a question of voluntary market exchange. Trade is a matter of the parties involved in each exchange, not a conflict between the parties or their ‘teams’. In fact, the state is antithetical to this freedom, whether or not it is exercised alone or in voluntary association. Thus, a libertarian cannot see the state as a mechanism for good, or as a means to an end, no matter how legitimate the end.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/08NfG5QJsCQ" height="1" width="1" alt=""/>Per Bylund<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/sinking.PNG?itok=Fx4AvuDB" width="240" alt="sinking.PNG" />46494May 20, 2019 - 6:00 AMFront page feedno Rothbard wrote in the Libertarian Forum (v. 1, p. 184) that “… libertarians, if they have any personal philosophy beyond freedom from coercion, are supposed to be at the very least individualists.” Indeed, libertarianism holds high the rights and responsPer Bylund Rothbard wrote in the Libertarian Forum (v. 1, p. 184) that “… libertarians, if they have any personal philosophy beyond freedom from coercion, are supposed to be at the very least individualists.” Indeed, libertarianism holds high the rights and responsibilities of the sovereign individual: the right to self and to justly acquired property and thus the right not to be coerced or arbitrarily restricted; the responsibility for one’s own actions and the moral duty to respect and honor other individuals’ rights. Yet libertarianism, or at least a relatively large subset of proponents of libertarianism, has taken a strange collectivist turn in the recent years. This is evident in a number of issues, such as free trade, where libertarians used to be in agreement in principle, albeit not necessarily in all the details or the applications of those principles. In contrast, this new turn argues from a different starting point. Rather than the individual’s rights, the starting point for this group is instead a notion of the individual’s collective belonging and identity (such as one’s country or ethnicity). There has of course never been a problem for libertarians to recognize individuals for who they are, or choose to be, and thus within their preferred social and cultural context. No man is an island, and as social beings we are embedded in a context of community, culture, and tradition. The distinction between individualist and collectivist is not either-or, but which is primary: for collectivists, the individual is subjected to the will of the collective (or, in reality, the will of its leadership); for individualists, the collective has no right of its own but is subject to the individual’s choice to associate. For obvious reasons, the analysis of any state of affairs from a collectivist point of view is different than that from an individualist point of view. The issue of free trade illustrates this clearly. Libertarians used to be universally and uninhibitedly for free trade. Whether domestically or across borders, voluntary exchange serves individuals best—and any restriction thereof is a violation of their rights. Thus, any restrictions should always be abolished, and the sooner the better. Granted, reality is somewhat more complex. As I discuss in The Seen, the Unseen, and the Unrealized: How Regulations Affect Our Everyday Lives, whenever the state regulates economic action, there are severe and oftentimes far-reaching distortions of both structure and outcome of market exchange. As libertarians have long recognized, regulations create winners and losers. Also, rolling back individual regulations, while it potentially causes a “freer” market, it will cause a different set of winners and losers. The only truly fair and just economy is one completely devoid of the state’s manipulations, whether those are actively pursued or passively effected. These complex implications of trade policy were never seen as an argument against deregulation, however. Rather, it is an argument for letting people and businesses exchange without interventions. Less intervention means less distortion, and this is always preferable. This should be preferred even by interventionists, because, as Mises famously recognized in Bureaucracy, Economic interventionism is a self-defeating policy. The individual measures that it applies do not achieve the results sought. They bring about a state of affairs, which—from the viewpoint of its advocates themselves—is much more undesirable than the previous state they intended to alter. In other words, libertarians were free traders and favored any step in the direction of free trade. But this is no longer obvious. Trump’s trade war with China appears to have caused a rift within libertarianism, or at least among those libertarians who eagerly discuss policy online, alongside the individualist/collectivist fault line. Libertarian-individualists are true to the "traditional" libertarian view that the state should get ouAustrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/464943 Modern Arguments for Tariffs, Debunkedhttp://feedproxy.google.com/~r/MisesMedia/~3/hiVewZY5omk/46464
<p>[<em>Adapted from "<a href="https://mises.org/library/some-subtler-arguments-tariffs">Some Subtler Arguments for Tariffs</a>," published December 2003.</em>]</p>
<p>Many proponents of tariffs recognize the absurdity of tariffs as a general rule. However, they feel that there are certain, special cases in which tariffs are justified, and indeed vital to a nation's survival. In this article, I will analyze three such arguments:</p>
<h4>I. REDUCE TRADE DEFICIT</h4>
<p>Many people believe that a tariff on a specific country's goods is necessary whenever the United States suffers from a high trade deficit with that country. (A trade deficit occurs when the monetary value of imports from a country exceeds the monetary value of exports to that same country.) Yes, such people might argue, trade is good in general, but only when it is balanced. If the U.S. consistently buys more from, say, Japan than the Japanese buy from us, then this is a losing proposition in the long run, because it drains our currency and undermines our ability to produce in the future.</p>
<p>Such arguments are almost as silly as the general desire for protectionism, for they overlook the fact that a country might have a trade deficit with Japan but a trade <em>surplus</em> with other countries. A country ultimately pays for its imports with exports, but that doesn't mean a country must pay for its imports <em>from</em> <em>Japan</em> with exports <em>to Japan</em>.</p>
<p>To see this, imagine a simplified scenario where Japan sells automobiles to the U.S., the U.S. sells software to Kuwait, and Kuwait sells oil to Japan. In this fictitious example, the U.S. would have a trade deficit with Japan but a surplus with Kuwait, Kuwait would have a trade deficit with the U.S. but a surplus with Japan, and Japan would have a trade deficit with Kuwait but a surplus with the U.S. In terms of currency flows, Japanese automakers would probably accept U.S. dollars in exchange for their products, and then sell these dollars on world currency markets against Kuwaiti dinars. Then the Japanese could use the dinars to buy Kuwaiti oil, while the Kuwaitis would use the dollars to import American software.</p>
<p>If trade deficits still seem dangerous, consider that everyone (who has a job) has a huge trade surplus with the city in which his or her employer is located, and a trade deficit with many other cities in the United States. In my case (and as I explain to my students), I have a huge trade surplus with Hillsdale County: if we added up all of the transactions I conduct with people who live in Hillsdale County, we would find that every month I end up paying out far less than I receive. In contrast, I have a large trade deficit with the nearby city of Jackson, since this is where my wife and I go on weekends when we want to do some decent shopping. Am I conducting my trade policy foolishly? Should I restrict my purchases from Jackson until I take a part-time job in that city, perhaps at the Denny's?</p>
<h4>II. INFANT INDUSTRIES</h4>
<p>Another popular justification for tariffs is the infant industry argument. According to this argument, a tariff is indeed bad in general. However, a <em>temporary</em> tariff in a developing industry is a good thing, because it allows the domestic firms to mature and become competitive with foreign, established firms in the industry. Once the infant industry has caught up with the state of the art foreign competitors, the tariff can be removed.</p>
<p>It is telling that such proposals never mention the <em>duration</em> of the "maturation" process. After all, if consumers are forced (by the tariff) to pay higher prices to relatively inefficient domestic producers for, say, two years, after which the domestic producers will outcompete the foreign rivals and offer lower prices forever after, then the deal doesn't sound so bad. But if consumers are forced to indirectly subsidize inefficient domestic producers for <em>eighty</em> years in the hope that they will one day become competitive, then the proposal sounds far less appealing. The fact that those espousing the infant industry argument never even mention the time frame just shows how little thought they've actually given to their proposal.</p>
<p>The infant industry proposals notwithstanding, the free market contains a mechanism by which firms can suffer short-run losses so long as they are compensated by eventual long-run profits. That mechanism is simply a <em>loan</em>. Plenty of new firms, especially sole proprietorships, don't make money in their first few years of operation. But so long as the present value of the firm's expected future cash flows is positive, the firm's owners should be able to borrow money to finance the first few years as they develop experience, name brand trust, etc.</p>
<p>If a firm or group of firms can't achieve funding from private investors to go ahead with their projects because the present values of their ventures are negative, then that is the market's way of saying that their schemes would squander valuable resources in the short run without sufficiently compensating gains in the long run. The advocate of a tariff to promote an infant industry is thus saying that he or she knows better how to determine intertemporal tradeoffs than the average person in his decisions to borrow or lend money at different rates of interest.</p>
<p>The absurdity of the infant industry tariff can be illustrated by considering an "infant worker" tax, which would be a tax levied on experienced workers in order to encourage businesses to hire younger workers with less experience. After all, without giving the young workers such help, how would they be able to survive during the years of training in schools? Clearly we need to tax older workers in order to encourage the development of human capital in our infant workers!</p>
<h4>III. NATIONAL SECURITY</h4>
<p>A third popular argument in support of tariffs is that certain industries, such as steel, are essential for war preparedness. People arguing this route may concede that steel prices will be higher, and the standard of living lower, from a purely economic point of view, but that it's better to lose a few dollars per year and have a guaranteed supply of steel rather than risk losing a war.</p>
<p>This argument fails to appreciate that the free market is entirely capable of handling disruptions in supply. If the protectionist citizen who writes Letters to the Editor is capable of foreseeing an interruption in steel imports during a major war, so too can the tycoons and speculators in the steel industry itself. After all, they stand to make or lose billions of dollars depending on the accuracy of their forecasts.</p>
<p>Consider the worst-case scenario where the U.S. imports all of its steel from foreign countries, and there is a large probability that there will be a major war in one year, and that if this happens every single one of our suppliers will cut off shipment of steel. What will be the market's response? Will steel continue to sell at its usual price, and will people in the steel industry focus merely on tomorrow's stock prices?</p>
<p>Of course not. If the supply of steel should be completely cut off, the market price of steel would skyrocket (assuming the government does not take steps to prevent "gouging" and "profiteering"). Because of this possibility, speculators <em>today</em> will buy and stockpile huge quantities of steel at the current low prices. (After all, even if the war never comes, they can simply resell the steel at its original price, losing only the costs of storage. Steel is not perishable like milk or tomatoes.)</p>
<p>In addition, if the war is expected to drag on for many years, so that at that point a domestic steel industry would be necessary, then it will be presently profitable for entrepreneurs to refit their factories so that a switch to steel production can be effected relatively quickly should war break out. And if, because of this costly refitting, the firms in question can cover their variable costs (though not their total costs) through production of steel, then the possibility of war (and exorbitant steel prices) will spur a domestic steel industry operating at a short-run loss in the hope of making up for its sunk costs once war breaks out.</p>
<p>In short, the profit system will automatically lead private businesspeople to take precisely those farsighted, cautionary measures that the steel tariff allegedly promotes. The difference is, the private actions would only be undertaken if the risks were high enough to make the cautionary measures worth their cost, whereas politicians will enact steel tariffs in the name of defense even if there is no real threat of a complete disruption in imports.</p>
<p>In conclusion, we have seen that three popular arguments for tariffs—reducing trade deficits, promoting infant industries, and ensuring national security—are just as fallacious as the cruder protectionist claims.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/hiVewZY5omk" height="1" width="1" alt=""/>Robert P. Murphy<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/shipping_0.PNG?itok=GsVq3ph3" width="240" alt="shipping_0.PNG" />46464May 18, 2019 - 2:00 PMFront page feedno [Adapted from "Some Subtler Arguments for Tariffs," published December 2003.] Many proponents of tariffs recognize the absurdity of tariffs as a general rule. However, they feel that there are certain, special cases in which tariffs are justified, and inRobert P. Murphy [Adapted from "Some Subtler Arguments for Tariffs," published December 2003.] Many proponents of tariffs recognize the absurdity of tariffs as a general rule. However, they feel that there are certain, special cases in which tariffs are justified, and indeed vital to a nation's survival. In this article, I will analyze three such arguments: I. REDUCE TRADE DEFICIT Many people believe that a tariff on a specific country's goods is necessary whenever the United States suffers from a high trade deficit with that country. (A trade deficit occurs when the monetary value of imports from a country exceeds the monetary value of exports to that same country.) Yes, such people might argue, trade is good in general, but only when it is balanced. If the U.S. consistently buys more from, say, Japan than the Japanese buy from us, then this is a losing proposition in the long run, because it drains our currency and undermines our ability to produce in the future. Such arguments are almost as silly as the general desire for protectionism, for they overlook the fact that a country might have a trade deficit with Japan but a trade surplus with other countries. A country ultimately pays for its imports with exports, but that doesn't mean a country must pay for its imports from Japan with exports to Japan. To see this, imagine a simplified scenario where Japan sells automobiles to the U.S., the U.S. sells software to Kuwait, and Kuwait sells oil to Japan. In this fictitious example, the U.S. would have a trade deficit with Japan but a surplus with Kuwait, Kuwait would have a trade deficit with the U.S. but a surplus with Japan, and Japan would have a trade deficit with Kuwait but a surplus with the U.S. In terms of currency flows, Japanese automakers would probably accept U.S. dollars in exchange for their products, and then sell these dollars on world currency markets against Kuwaiti dinars. Then the Japanese could use the dinars to buy Kuwaiti oil, while the Kuwaitis would use the dollars to import American software. If trade deficits still seem dangerous, consider that everyone (who has a job) has a huge trade surplus with the city in which his or her employer is located, and a trade deficit with many other cities in the United States. In my case (and as I explain to my students), I have a huge trade surplus with Hillsdale County: if we added up all of the transactions I conduct with people who live in Hillsdale County, we would find that every month I end up paying out far less than I receive. In contrast, I have a large trade deficit with the nearby city of Jackson, since this is where my wife and I go on weekends when we want to do some decent shopping. Am I conducting my trade policy foolishly? Should I restrict my purchases from Jackson until I take a part-time job in that city, perhaps at the Denny's? II. INFANT INDUSTRIES Another popular justification for tariffs is the infant industry argument. According to this argument, a tariff is indeed bad in general. However, a temporary tariff in a developing industry is a good thing, because it allows the domestic firms to mature and become competitive with foreign, established firms in the industry. Once the infant industry has caught up with the state of the art foreign competitors, the tariff can be removed. It is telling that such proposals never mention the duration of the "maturation" process. After all, if consumers are forced (by the tariff) to pay higher prices to relatively inefficient domestic producers for, say, two years, after which the domestic producers will outcompete the foreign rivals and offer lower prices forever after, then the deal doesn't sound so bad. But if consumers are forced to indirectly subsidize inefficient domestic producers for eighty years in the hope that they will one day become competitive, then the proposal sounds far less appealing. The fact that those espousing the infant industry argument never even mention the time frame just shows how little thoughtAustrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46464Why the Elites Look Down on Manual Laborhttp://feedproxy.google.com/~r/MisesMedia/~3/fxzpHgIMexY/46473
<p>Since the $15 minimum wage has become a major policy proposal in America, many politicians feel that certain forms of work are undignified.</p>
<p>This became a controversial talking point when Congresswoman Alexandria Ocasio-Cortez declared that New Yorkers <u> <a href="https://thehill.com/homenews/house/430358-ocasio-cortez-in-bronx-speech-new-yorkers-deserve-dignified-jobs"> deserve </a> </u> “dignified jobs” after a deal to build a second Amazon headquarters in Queens fell through. In another <u> <a href="https://www.aier.org/article/aoc-thinks-standing-line-undignified-work-shes-wrong"> incident</a></u>, the congresswoman was aghast at how several people, some which were homeless, were paid to wait in line for lobbyists who wanted spots to get in first at a hearing. She expressed her <u> <a href="https://twitter.com/AOC/status/1095764378954141696"> astonishment</a> </u> that this was “a normal practice and people don’t bat an eye.”</p>
<p>For an elected official who claims to be fighting for the common person, this kind of outlook reeks of elitism. It completely ignores that people must find ways to make ends meet. That sometimes means taking on “undignified” jobs. In fact, these “undignified” jobs are often beneficial when considering the alternatives. For the homeless, this could mean the difference between holding a steady job or starving in the cold.</p>
<h4><strong>Work is a Stepping Stone for Many Success Stories</strong></h4>
<p>When we think about it, “undignified” work is American as apple pie. Industrial magnates like Andrew Carnegie started out working in a <u> <a href="http://www.americaslibrary.gov/aa/carnegie/aa_carnegie_work_1.html"> textile mill </a> </u> making $1.20 a week. Such working conditions would elicit responses of shock and horror from intellectual elites these days. Back then, when there was actual labor freedom, this was how people got their feet wet in the workforce.</p>
<p>During the Gilded Age, social mobility was almost a given thanks to the government’s relatively hands-off approach in the economy. There was no <u> <a href="https://ammo.com/articles/us-federal-income-tax-guide-16th-amendment-history"> income taxation</a></u>, no <u> <a href="https://mises.org/power-market/cei-federal-regulations-cost-19-trillion-annually"> federal regulatory maze</a></u>, and no <u> <a href="https://mises.org/library/corrupt-origins-central-banking"> central banking </a> </u> apparatus to create distortions in the economy and impede people’s ability to work.</p>
<p>Like the Carnegie case, a good portion of American success stories were wrapped in modesty. Some of America’s most successful entrepreneurs started out working in many so-called “dead-end” jobs. What we forget is that these jobs provided a solid foundation for these entrepreneurs to move forward.</p>
<p>Many forms of basic jobs lie in the small business sector, which to be fair, has been largely downplayed by commentators across the political spectrum. As Ryan McMaken illustrates, small businesses give workers valuable labor experience while also providing social benefits. Sadly, the same culprit—government—gets in the way of small business development. McMaken <u> <a href="https://mises.org/wire/small-businesses-are-key-improving-lives-workers"> expands</a></u>:</p>
<blockquote><p>At the same time, governments at all levels relentlessly hand down ever more regulations and mandates to businesses of all sizes. Yet it is small firms who suffer the most because they have less access to financing, equity, and resources needed to cope with mounting regulatory requirements. Licensing and labor regulations create more pitfalls for small business owners to fall into while locking many potential business owners out of industries entirely, unless they comply with arbitrary "training" or certification mandates.</p></blockquote>
<h4><strong>Mises Understood the Elite’s Disdain for “Dirty Work”</strong></h4>
<p>Given how much the economy has shifted in the West towards<u> </u>more service-oriented, white-collar work, it is automatically assumed that white-collar work is the only path to take. Thus, public policy should be designed to accommodate that. However, thanks to the rise of personalities like Mike Rowe and his series <em>Dirty Jobs, </em>there has been somewhat of a resurgence of work that is usually frowned upon by political elites. In fact, some individuals have been able to carve out lucrative niches in these fields. And that ruffles the feathers of many political commentators, which Mises even <u> <a href="https://mises.org/files/anti-capitalistic-mentalitypdf-0"> observed </a> </u> decades ago in <em>The Anti-Capitalistic Mentality</em>:</p>
<blockquote><p>Besides being harassed by the general hatred of capitalism common to most people, the white collar worker labors under two special afflictions peculiar to his own category.</p>
<p>Sitting behind a desk and committing words and figures to paper, he is prone to overrate the significance of his work. Like the boss, he writes and reads what other fellows have put on paper and talks directly or over the telephone with other people. Full of conceit, he imagines himself to belong to the enterprise's managing elite and compares his own tasks with those of his boss. As a "worker by brain" he looks arrogantly down upon the manual worker whose hands are calloused and soiled.</p></blockquote>
<p>Contrary to popular belief, certain individuals have struck it rich in fields like plumbing and welding by using the knowledge they learned as average workers and then applying it in the entrepreneurial realm. This obviously generates fury among certain white-collar workers which Mises also touched upon:</p>
<blockquote><p>It makes him furious to notice that many of these manual laborers get higher pay and are more respected than he himself. What a shame, he thinks, that capitalism does not appraise his "intellectual" work according to its "true" value and fondles the simple drudgery of the "uneducated."</p></blockquote>
<p>Mike Rowe correctly <u> <a href="https://www.zerohedge.com/news/2019-04-16/mike-dirty-jobs-rowe-routs-americas-school-system-were-obsessed-credentialing-not"> notes </a> </u> that Americans have become fanatically obsessed with the degree to white-collar work pipeline which often involves individuals racking up considerable amounts of debt to later work in fields that they don’t like. Bear in mind, this inflated cost of education is no coincidence. It is the product of misguided government subsidies in the <u> <a href="https://mises.org/wire/student-debt-conundrum"> student loan industry </a> </u> and <u> <a href="https://www.garynorth.com/public/12796.cfm"> accreditation standards </a> </u> that protect schools from competition.</p>
<h4><strong>The State is Still the Main Culprit</strong></h4>
<p>Despite talking heads’ claims of the changing nature of politics, certain themes have not changed. The <u> <a href="https://en.wikipedia.org/wiki/Managerial_state"> managerial state </a> </u> remains intact.</p>
<p>Nevertheless, we should always remind the working class that their “undignified” work should be celebrated. Often times, many of the economic struggles they face can be blamed on government intrusions in the marketplace. After all, the American story is filled with countless cases of individuals starting out at humble jobs to later go on to do bigger things. The key factor in those cases was that the state was small enough to allow people to freely progress according to their efforts and not have to worry about being stuck in a career plateau.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/fxzpHgIMexY" height="1" width="1" alt=""/>José Niño<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/mb.PNG?itok=RFfiCUQ9" width="240" alt="mb.PNG" />46473May 18, 2019 - 11:00 AMFront page feedno Since the $15 minimum wage has become a major policy proposal in America, many politicians feel that certain forms of work are undignified. This became a controversial talking point when Congresswoman Alexandria Ocasio-Cortez declared that New Yorkers deJosé Niño Since the $15 minimum wage has become a major policy proposal in America, many politicians feel that certain forms of work are undignified. This became a controversial talking point when Congresswoman Alexandria Ocasio-Cortez declared that New Yorkers deserve “dignified jobs” after a deal to build a second Amazon headquarters in Queens fell through. In another incident, the congresswoman was aghast at how several people, some which were homeless, were paid to wait in line for lobbyists who wanted spots to get in first at a hearing. She expressed her astonishment that this was “a normal practice and people don’t bat an eye.” For an elected official who claims to be fighting for the common person, this kind of outlook reeks of elitism. It completely ignores that people must find ways to make ends meet. That sometimes means taking on “undignified” jobs. In fact, these “undignified” jobs are often beneficial when considering the alternatives. For the homeless, this could mean the difference between holding a steady job or starving in the cold. Work is a Stepping Stone for Many Success Stories When we think about it, “undignified” work is American as apple pie. Industrial magnates like Andrew Carnegie started out working in a textile mill making $1.20 a week. Such working conditions would elicit responses of shock and horror from intellectual elites these days. Back then, when there was actual labor freedom, this was how people got their feet wet in the workforce. During the Gilded Age, social mobility was almost a given thanks to the government’s relatively hands-off approach in the economy. There was no income taxation, no federal regulatory maze, and no central banking apparatus to create distortions in the economy and impede people’s ability to work. Like the Carnegie case, a good portion of American success stories were wrapped in modesty. Some of America’s most successful entrepreneurs started out working in many so-called “dead-end” jobs. What we forget is that these jobs provided a solid foundation for these entrepreneurs to move forward. Many forms of basic jobs lie in the small business sector, which to be fair, has been largely downplayed by commentators across the political spectrum. As Ryan McMaken illustrates, small businesses give workers valuable labor experience while also providing social benefits. Sadly, the same culprit—government—gets in the way of small business development. McMaken expands: At the same time, governments at all levels relentlessly hand down ever more regulations and mandates to businesses of all sizes. Yet it is small firms who suffer the most because they have less access to financing, equity, and resources needed to cope with mounting regulatory requirements. Licensing and labor regulations create more pitfalls for small business owners to fall into while locking many potential business owners out of industries entirely, unless they comply with arbitrary "training" or certification mandates. Mises Understood the Elite’s Disdain for “Dirty Work” Given how much the economy has shifted in the West towards more service-oriented, white-collar work, it is automatically assumed that white-collar work is the only path to take. Thus, public policy should be designed to accommodate that. However, thanks to the rise of personalities like Mike Rowe and his series Dirty Jobs, there has been somewhat of a resurgence of work that is usually frowned upon by political elites. In fact, some individuals have been able to carve out lucrative niches in these fields. And that ruffles the feathers of many political commentators, which Mises even observed decades ago in The Anti-Capitalistic Mentality: Besides being harassed by the general hatred of capitalism common to most people, the white collar worker labors under two special afflictions peculiar to his own category. Sitting behind a desk and committing words and figures to paper, he is prone to overrate the significance of his work. Like the boss, he writes Austrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46473How Central-Bank Interest-Rate Policy Is Destabilizing Bankshttp://feedproxy.google.com/~r/MisesMedia/~3/XihkG1lLcjI/46492
<p>Broadly speaking, banks operate under the concept of maturity transformation. Banks take short-term – less than one year – financing vehicles, such as customer deposits, and use that to finance long-term – more than one year – returns. These returns range from the most commonly understood loans, such as auto loans and mortgages, to investments in equity, bonds and public debt. Banks make money on the interest spread between what they pay to the owners of the money and what is earned from the operations. Banks also make money on other services, such as wealth management and account fees, though these are relatively small compared to the maturity transformation business.</p>
<p>In terms of assets, the primary asset a bank holds is the demand deposit, also referred to as the core deposit. These are your everyday savings and checking accounts. Banks also sell Wholesale Deposits, such as CDs, have shareholder equity and also can take out debt, such as interbank lending. As these assets are owned by someone else, each of them demands a return for the use of those assets. These are part of the costs of operation for a bank. There are also more fixed operating costs, such as employees, buildings and equipment that must also be financed.</p>
<p>So, a bank will take assets and formulate loans on them. Like most of the world, the US operates on a fractional reserve system, one where banks originate loans in excess of the deposits on-hand. Take a look at the balance sheet of a large regional bank, <a href="https://www.sec.gov/Archives/edgar/data/35527/000119312519059441/d680668d10k.htm#tx680668_133"> 5/3 Bank</a>, for example. For the 2018 fiscal year, 5/3 reported non-capital assets of $94 billion and a deposit base of $108 billion. However, the cash and cash equivalent component of these assets stood at $4.4 billion, or just 4% of demand deposits. It is critical, then, that the bank convinces those depositors to keep their deposits with 5/3 and not request a withdrawal. Doing so would collapse the bank as it's unable to quickly make good on any withdrawal request greater than 4% of the deposit base. To do this, the bank pays the depositor interest on the deposit.</p>
<h4><strong>How the Collapse Happens</strong></h4>
<p>This is where interest stability becomes a problem. When the Federal Reserve manipulates interest rates, banks are able to project fairly steady expenses for operations. While a business likes it when operational costs are relatively constant, this creates major problems for the banking system. When interest rates are suppressed to near 0% for, let’s say, <a href="https://mises.org/power-market/fed-founders-get-ready-more-radical-monetary-policy"> a decade</a>, the banking system builds up an income portfolio that is anchored to that near 0% cost of money. Back to the 5/3 balance sheet, we notice that the bank’s returns were $5.1 billion, or around a 5% average return on assets. $4 billion of those returns are tied up in $94 billion in long term lending. Interest expenses came in at $1 billion, or a little over 1%. The company also has $3.9 billion in relatively fixed operating expenses.</p>
<p>Basically, 5/3 Bank is operating on fairly thin profit margins relative to the bank’s asset base, which makes the bank highly vulnerable to any interest rate fluctuations.</p>
<p>Let’s say the Federal Reserve, then, begins to step up the target interest rate. As the Fed reduces competition on the market and sells assets, interest rates rise as these new assets begin to compete with existing assets. 5/3 then runs into a problem. If the risk-free rate starts to rise, depositors will look at that paltry deposit return and begin to wonder why they’re keeping money in the bank when other low risk vehicles are now offering higher returns. Since 5/3 can’t afford to lose much cash, the bank will be prompted to start raising deposit rates since they want to keep money in the bank. They will also have to refinance short term revolving debt at a higher rate.</p>
<p>The quandary to the bank is that nearly their entire revenue stream is made up of fixed-return vehicles. The effective spread between total costs and total revenue is just 0.2% of assets. This means that if financing costs increase by more than 20 basis points, 5/3 bank begins to take a loss. Since the bank had made loans for over a decade with these extremely low rates in mind, it will take some time to rebuild a portfolio of higher interest rate loans and investments to counterbalance this loss or the bank will seek to engage in high risk investments.</p>
<p>For a normal company, this isn’t a big deal. Companies can withstand losses for periods of time because they tend to build up a cash base to get through weak periods as they retool their operations. A bank, though, lacks this flexibility as they have to retain cash ratios to facilitate depositor withdrawals. A mere 1% increase in total borrowing costs to 5/3 will see the bank run out of cash in just four years, but since the bank has to maintain ratios, this will prompt the bank to begin selling assets to take on additional loans.</p>
<p>The problem compounds two-fold from this point for 5/3. First, the primary assets are income generating, so for every asset sold to keep cash ratios afloat just exacerbates the cash bleed and any new debt has interest expenses that need servicing, servicing without a corresponding asset return. Second, the assets have rates below market rate, so have to be sold at a discount.</p>
<p>Compounding further, every bank is operating like this. Every bank is operating on thin margins that assume a perpetual near-zero rate regime. If one bank has to unload assets to keep cash ratios intact, all the banks are inevitably doing the same. The largest portfolio item is usually the one that attempts liquidation – in 2007 that was the home mortgage. This selloff is self-reinforcing and creates a collapse since there aren’t many entities out there with free cash available to absorb this mass sell-off. Hence why the second largest asset class sitting in the Federal Reserve today is pre-2008 non-performing mortgage backed securities – the MBS holders, banks themselves, were stuck holding the bag. Banks ran to the last entity with cash available — the one that prints it — for a bailout.</p>
<p>Central banks will inevitably respond by trying to stabilize rates again, generally suppressing rates below the last cycle’s floor. Central banks, then, perpetually ratchet the rates down until they run into that 0% barrier then begin to engage in radical monetary policy when that lever is no longer available to pull. Canada’s pattern since 1980 is a perfect example of this, an ever downward sloping roller coaster.</p>
<h4><strong>How to Avoid This</strong></h4>
<p>If banks didn’t operate in a world of constant interest rates, an increase in rates wouldn’t be an especially large problem. First, if rates are fluctuating, banks naturally hedge against changes in interest rates. When they originate rates at a higher level and rates decline, they will enjoy a higher average return to build a buffer for when rates rise again. Second, if rates engage in natural fluctuation, banks would be hesitant to finance long-term loans using short term vehicles. Fractional reserve banking partially operates on the expectation that interest rates will remain stable for the long run. If the cost of money next month could be 20 basis points higher than it is this month, banks will have incentives to seek fixed financing solutions as opposed to leveraging depositor money. In other words, banks would likely cease engaging in maturity transformation since the risk of interest rates exceeding the return on the entire portfolio is just too high. That or at least limit exposure to this form of lending to something less than a gaudy 27-1 leverage ratio and promote sales of fixed financing like CDs. Market uncertainty and the removal of a central banking backstop would create a more stable banking system, which means naturally moving toward a full-reserve system.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/XihkG1lLcjI" height="1" width="1" alt=""/>Justin Murray<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/static-page/img/burning1.PNG?itok=BOsLmNFv" width="240" alt="burning1.PNG" />46492May 18, 2019 - 6:00 AMFront page feedno Broadly speaking, banks operate under the concept of maturity transformation. Banks take short-term – less than one year – financing vehicles, such as customer deposits, and use that to finance long-term – more than one year – returns. These returns rangJustin Murray Broadly speaking, banks operate under the concept of maturity transformation. Banks take short-term – less than one year – financing vehicles, such as customer deposits, and use that to finance long-term – more than one year – returns. These returns range from the most commonly understood loans, such as auto loans and mortgages, to investments in equity, bonds and public debt. Banks make money on the interest spread between what they pay to the owners of the money and what is earned from the operations. Banks also make money on other services, such as wealth management and account fees, though these are relatively small compared to the maturity transformation business. In terms of assets, the primary asset a bank holds is the demand deposit, also referred to as the core deposit. These are your everyday savings and checking accounts. Banks also sell Wholesale Deposits, such as CDs, have shareholder equity and also can take out debt, such as interbank lending. As these assets are owned by someone else, each of them demands a return for the use of those assets. These are part of the costs of operation for a bank. There are also more fixed operating costs, such as employees, buildings and equipment that must also be financed. So, a bank will take assets and formulate loans on them. Like most of the world, the US operates on a fractional reserve system, one where banks originate loans in excess of the deposits on-hand. Take a look at the balance sheet of a large regional bank, 5/3 Bank, for example. For the 2018 fiscal year, 5/3 reported non-capital assets of $94 billion and a deposit base of $108 billion. However, the cash and cash equivalent component of these assets stood at $4.4 billion, or just 4% of demand deposits. It is critical, then, that the bank convinces those depositors to keep their deposits with 5/3 and not request a withdrawal. Doing so would collapse the bank as it's unable to quickly make good on any withdrawal request greater than 4% of the deposit base. To do this, the bank pays the depositor interest on the deposit. How the Collapse Happens This is where interest stability becomes a problem. When the Federal Reserve manipulates interest rates, banks are able to project fairly steady expenses for operations. While a business likes it when operational costs are relatively constant, this creates major problems for the banking system. When interest rates are suppressed to near 0% for, let’s say, a decade, the banking system builds up an income portfolio that is anchored to that near 0% cost of money. Back to the 5/3 balance sheet, we notice that the bank’s returns were $5.1 billion, or around a 5% average return on assets. $4 billion of those returns are tied up in $94 billion in long term lending. Interest expenses came in at $1 billion, or a little over 1%. The company also has $3.9 billion in relatively fixed operating expenses. Basically, 5/3 Bank is operating on fairly thin profit margins relative to the bank’s asset base, which makes the bank highly vulnerable to any interest rate fluctuations. Let’s say the Federal Reserve, then, begins to step up the target interest rate. As the Fed reduces competition on the market and sells assets, interest rates rise as these new assets begin to compete with existing assets. 5/3 then runs into a problem. If the risk-free rate starts to rise, depositors will look at that paltry deposit return and begin to wonder why they’re keeping money in the bank when other low risk vehicles are now offering higher returns. Since 5/3 can’t afford to lose much cash, the bank will be prompted to start raising deposit rates since they want to keep money in the bank. They will also have to refinance short term revolving debt at a higher rate. The quandary to the bank is that nearly their entire revenue stream is made up of fixed-return vehicles. The effective spread between total costs and total revenue is just 0.2% of assets. This means that if financing costs increase by more than 20 bAustrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46492The Meaning of Competitionhttp://feedproxy.google.com/~r/MisesMedia/~3/QwOznNYRH_c/46504
<p>Competition is a process of the formation of opinion: by spreading information, it creates that unity and coherence of the economic system which we presuppose when we think of it as one market.</p>
<p>Excerpted from <em>Individualism and Economic Order</em> (1948), this essay reproduces the substance of the Stafford Little Lecture delivered at Princeton University on May 20, 1946.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/QwOznNYRH_c" height="1" width="1" alt=""/>Friedrich A. Hayek<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/static-page/img/MisesU_ReqReadingsAudio_750x516_20190516.jpg?itok=hIeuJyis" width="240" alt="Mises University Required Reading" title="Mises University Required Reading" />46504May 17, 2019 - 2:30 PMFront page feedno Competition is a process of the formation of opinion: by spreading information, it creates that unity and coherence of the economic system which we presuppose when we think of it as one market. Excerpted from Individualism and Economic Order (1948), thisFriedrich A. Hayek Competition is a process of the formation of opinion: by spreading information, it creates that unity and coherence of the economic system which we presuppose when we think of it as one market. Excerpted from Individualism and Economic Order (1948), this essay reproduces the substance of the Stafford Little Lecture delivered at Princeton University on May 20, 1946. Austrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46504The Regulatory-Industrial Complexhttp://feedproxy.google.com/~r/MisesMedia/~3/baErMvGOduM/5725
<p>Socialists want socialism for everyone else, but capitalism for themselves, while capitalists want capitalism for everyone else, but socialism for themselves.</p>
<p>Neither Ted Kennedy nor Jane Fonda practices a vow of poverty, nor are they taking any homeless into their mansions, while too many big companies try to short-circuit the market with government privileges. And one way they do it is through the regulatory agencies that acne Washington, DC.</p>
<p>If I may make a public confession (counting on the charity of Mises Daily readers): I used to work for the US Congress. I've since gone straight, of course, but the experience had its value, much as the future criminologist might benefit from serving with the James Gang.</p>
<p>For one thing, being on Capitol Hill showed me that, unlike the republic of the Founding Fathers' vision, our DC Leviathan exists only to extract money and power from the people for itself and the special interests.</p>
<p>Ludwig von Mises called this an inevitable "caste conflict." There can be no natural class conflict in society, Mises showed, since the free market harmonizes all economic interests, but in a system of government-granted privileges, there must be a struggle between those who live off the government and the rest of us. It is a disguised struggle, of course, since truth threatens the loot.</p>
<p>When I worked on Capitol Hill, Jimmy Carter was bleating about the energy crisis and promising to punish big oil with a "windfall profits tax." But I saw that the lobbyists pushing for the tax were from the big oil companies.</p>
<p>And, after a moment's thought, it was easy to realize why. There was no windfall-profits tax in Saudi Arabia, but it did fall heavily on Oklahoma. And as intended, the tax aided the big companies that imported oil by punishing their competitors, smaller, independent firms.</p>
<p>In the ensuing restructuring of the industry, also brought about by the price and allocation regulations of the Department of Energy, the big firms bought up domestic capacity at fire-sale prices, and then the Reagan administration repealed the tax and the regulations. Meanwhile, the big companies received contracts from the Department of Energy to produce money-losing "alternative fuels."</p>
<p>In every administration, the tools of inflation, borrowing, taxation, and regulation are used to transfer wealth from the people to the government and its cronies.</p>
<p>At times, one or another of these tools becomes politically dangerous, so the government alters the mix. That's why the Reagan administration switched from taxes and inflation to borrowing, and it's why the Bush administration, with the deficit a liability, calls for more taxes, inflation, and regulation.</p>
<p>A tremendous amount is at stake in the re-regulation of the economy advocated by the Bush administration. Just one clause in the Federal Register can mean billions for a favored firm or industry, and disaster for its competitors, which is why lobbyists cluster around the Capitol like flies around a garbage can.</p>
<p>While claiming to need more money for — among other vital projects — a trip to Mars supervised by Dan Quayle, the president is boosting the budget of every regulatory agency in Washington.</p>
<p>Here are just some of those agencies, and the way they function: Founded by Richard Nixon, the Occupational Safety and Health Administration is an antientrepreneur agency. Not only does OSHA target small- and medium-sized businesses, its regulatory cases are easily handled by Exxon's squad of lawyers, while they can bankrupt a small firm.</p>
<p>Also founded by Nixon, the Consumer Product Safety Commission issues regulations drawn up in open consultation with big business — regulations that often conform exactly to what those firms are already doing. Small businesses, on the other hand, must spend heavily to comply.</p>
<p>Another Nixon creation is the Environmental Protection Agency, whose budget is larded with the influence of politically connected businesses, and whose regulations buttress established industries and discriminate against entrepreneurs — by, for example, legalizing pollution for existing companies but making new firms spend heavily.</p>
<p>The Department of Housing and Urban Development was founded by Lyndon B. Johnson, but its roots stretch back to the housing policy of the New Deal, whose explicit purpose was to subsidize builders of rental and single-family housing. Since LBJ's Great Society, HUD has subsidized builders of public-housing projects, and of subsidized private housing. How can anyone be surprised that fat cats use HUD to line their pockets? That was its purpose.</p>
<p>The Securities and Exchange Commission was established by Franklin D. Roosevelt, with its legislation written by corporate lawyers to cartelize the market for big Wall Street firms. Over the years, the SEC has stopped many new stock issues by smaller companies, who might grow and compete with the industrial and commercial giants aligned with the big Wall Street firms. And right now, it is lessening competition in the futures and commodities markets.</p>
<p>The Interstate Commerce Commission was created in 1887 to stop "cut-throat" competition among railroads (i.e., competitive pricing) and to enforce high prices. Later amendments extended its power to trucking and other forms of transportation, where it also prevented competition. During the Carter administration, much of the ICC's power was trimmed, but some of this was undone in the Reagan administration.</p>
<p>The Federal Communications Commission was established by Herbert Hoover to prevent private property in radio frequencies, and to place ownership in the hands of the government. The FCC set up the network system, whose licenses went to politically connected businessmen, and delayed technological breakthroughs that might have threatened the networks. There was some deregulation during the Reagan administration — although it was the development of cable TV that did the most good, by circumventing the networks.</p>
<p>The Department of Agriculture runs America's farming on behalf of producers, keeping prices high, profits up, imports out, and new products off the shelves. We can't know what food prices would be in the absence of the appropriately initialed DOA, only that food would be much cheaper. Now, for the first time since the farm program was established by Herbert Hoover, as a copy of the Federal Food Administration he ran during World War I, we are seeing widespread criticism of farm welfare.</p>
<p>The Federal Trade Commission — as shown by the fascist-deco statue in front of its headquarters — claims to "tame" the "wild horse of the market" on behalf of the public. Since its founding in 1914, however, it has restrained the market to the benefit of established firms. That's why the chief lobbyists for the FTC were all from big business.</p>
<p>When then-Congressman Steve Symms (R-ID) tried to partially deregulate the Food and Drug Administration in the 1970s to allow more new drugs, he was stopped by the big drug companies and their trade association. Why? Because the FDA exists to protect them.</p>
<p>OSHA, CPSC, EPA, HUD, SEC, ICC, FCC, DOA, FTC, FDA — I could go on and on, through the entire alphabet from Hell. I have only scratched the villainous surface. But according to the average history or economics text, these agencies emerged in response to public demand. There is never a hint of the regulatory-industrial complex. We're told that the public is being served. And it is: on a platter.</p>
<div class="article-author"><p>This article was originally printed in the <em>Free Market</em>, September 1990. It is reprinted in <a href="http://mises.org/document/3861"><em>The Left, the Right, and the State</em></a> (2008).</p></div><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/baErMvGOduM" height="1" width="1" alt=""/>Llewellyn H. Rockwell Jr.<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/static-page/img/ManControllingTrade.jpg?itok=JQj2F1EV" width="240" alt="ManControllingTrade.jpg" />5725May 17, 2019 - 2:00 PMFront page feedno Socialists want socialism for everyone else, but capitalism for themselves, while capitalists want capitalism for everyone else, but socialism for themselves. Neither Ted Kennedy nor Jane Fonda practices a vow of poverty, nor are they taking any homelessLlewellyn H. Rockwell Jr. Socialists want socialism for everyone else, but capitalism for themselves, while capitalists want capitalism for everyone else, but socialism for themselves. Neither Ted Kennedy nor Jane Fonda practices a vow of poverty, nor are they taking any homeless into their mansions, while too many big companies try to short-circuit the market with government privileges. And one way they do it is through the regulatory agencies that acne Washington, DC. If I may make a public confession (counting on the charity of Mises Daily readers): I used to work for the US Congress. I've since gone straight, of course, but the experience had its value, much as the future criminologist might benefit from serving with the James Gang. For one thing, being on Capitol Hill showed me that, unlike the republic of the Founding Fathers' vision, our DC Leviathan exists only to extract money and power from the people for itself and the special interests. Ludwig von Mises called this an inevitable "caste conflict." There can be no natural class conflict in society, Mises showed, since the free market harmonizes all economic interests, but in a system of government-granted privileges, there must be a struggle between those who live off the government and the rest of us. It is a disguised struggle, of course, since truth threatens the loot. When I worked on Capitol Hill, Jimmy Carter was bleating about the energy crisis and promising to punish big oil with a "windfall profits tax." But I saw that the lobbyists pushing for the tax were from the big oil companies. And, after a moment's thought, it was easy to realize why. There was no windfall-profits tax in Saudi Arabia, but it did fall heavily on Oklahoma. And as intended, the tax aided the big companies that imported oil by punishing their competitors, smaller, independent firms. In the ensuing restructuring of the industry, also brought about by the price and allocation regulations of the Department of Energy, the big firms bought up domestic capacity at fire-sale prices, and then the Reagan administration repealed the tax and the regulations. Meanwhile, the big companies received contracts from the Department of Energy to produce money-losing "alternative fuels." In every administration, the tools of inflation, borrowing, taxation, and regulation are used to transfer wealth from the people to the government and its cronies. At times, one or another of these tools becomes politically dangerous, so the government alters the mix. That's why the Reagan administration switched from taxes and inflation to borrowing, and it's why the Bush administration, with the deficit a liability, calls for more taxes, inflation, and regulation. A tremendous amount is at stake in the re-regulation of the economy advocated by the Bush administration. Just one clause in the Federal Register can mean billions for a favored firm or industry, and disaster for its competitors, which is why lobbyists cluster around the Capitol like flies around a garbage can. While claiming to need more money for — among other vital projects — a trip to Mars supervised by Dan Quayle, the president is boosting the budget of every regulatory agency in Washington. Here are just some of those agencies, and the way they function: Founded by Richard Nixon, the Occupational Safety and Health Administration is an antientrepreneur agency. Not only does OSHA target small- and medium-sized businesses, its regulatory cases are easily handled by Exxon's squad of lawyers, while they can bankrupt a small firm. Also founded by Nixon, the Consumer Product Safety Commission issues regulations drawn up in open consultation with big business — regulations that often conform exactly to what those firms are already doing. Small businesses, on the other hand, must spend heavily to comply. Another Nixon creation is the Environmental Protection Agency, whose budget is larded with the influence of politically connected businesses, and whose regulations buttress established indAustrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/5725The Broken Windowhttp://feedproxy.google.com/~r/MisesMedia/~3/VmonSwbm71E/46498
<p>The broken-window fallacy, under a hundred disguises, is the most persistent in the history of economics. </p>
<p>Excerpted from <em>Economics in One Lesson</em>, pp. 11-13.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/VmonSwbm71E" height="1" width="1" alt=""/>Henry Hazlitt<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/static-page/img/MisesU_ReqReadingsAudio_750x516_20190516.jpg?itok=hIeuJyis" width="240" alt="Mises University Required Reading" title="Mises University Required Reading" />46498May 17, 2019 - 1:45 PMFront page feedno The broken-window fallacy, under a hundred disguises, is the most persistent in the history of economics. Excerpted from Economics in One Lesson, pp. 11-13. Henry Hazlitt The broken-window fallacy, under a hundred disguises, is the most persistent in the history of economics. Excerpted from Economics in One Lesson, pp. 11-13. Austrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46498Single-Payer Healthcare Is the Worst Kind of Universal Healthcarehttp://feedproxy.google.com/~r/MisesMedia/~3/1noMV5wV7g8/46503
<p>In the United States, thanks largely to Bernie Sanders, the term "<a href="https://www.cbo.gov/system/files/2019-05/55150-singlepayer.pdf">single-payer health care</a>" has become more or less synonymous with the phrase "universal healthcare."</p>
<p>This stems partially from the fact that "single-payer" is the term most often used to refer to foreign systems of universal healthcare, and also because most Americans know virtually nothing about how foreign healthcare systems work.</p>
<p>Moreover, when it comes to interacting with foreigners, Americans most often encounter the writings and opinion of other English speakers — which mostly means Canadians and British subjects. And it so happens both Canada and the United Kingdom employ single-payer healthcare systems.</p>
<p>Elsewhere in the world, however, it is not uncommon to find other countries that employ "multi-payer" and "multi-tier" healthcare systems that are nonetheless designed to provide universal coverage.</p>
<p>This is also especially important to recognize because single-payer healthcare systems are some of the <em>worst </em>systems in regards to freedom of choice and healthcare quality. This is because the primary benefit of single-payer healthcare — as so often recounted by its supporters — is that it is cheap.</p>
<p>But "cheapness" is not exactly the best criteria for judging a healthcare system, and the shortcomings of single-payer systems make this abundantly clear.</p>
<h4>What Is Single-Payer?</h4>
<p>So what makes a single-payer system distinct from other systems? As the name implies, a single-payer system is one in which there is only one source of payments or funding for healthcare transactions. This source, of course, is the government.</p>
<p>So, in a single-payer system healthcare services is paid for only through government funding. This can be done through a variety of mechanisms. For example, healthcare facilities can be directly funded and run by government agencies or they can be nominally private providers which receive all their payments from a government agency.</p>
<p>With single-payer systems there is no competition from other "payers" such as private insurance companies, or even cash-for-service firms.</p>
<p>Exceptions can be found in those services that are not deemed to be "essential" healthcare services. In Canada, for example, private health services are allowed in services legally defined as non-essential such as mental health, pharmaceuticals, some types of eye care, and long-term care.</p>
<p>Thus, strictly speaking, no system is a "pure" single-payer system that encompasses every conceivable type of care. Consequently, in both the UK and Canada, one will still encounter activists who think that the state-run healthcare systems are <em>too</em> <em>laissez-faire.</em> These critics claim coverage should be <em>expanded</em> to exclude private competition even more, and to expand the definition of "essential" services. It is not uncommon to hear claims that these systems are becoming "two-tier systems" (meant pejoratively) in which the implication is that there is one low-quality tier for ordinary people, and a high-quality tier for everyone else.</p>
<p>In practice, however, there is a reason most of the world points to the United Kingdom and Canada as examples of single-payer systems: they offer very few private-sector options for core services. While there are always <em>some</em> areas where private-sector activity allowed, these systems are fundamentally built on the idea of excluding private competition and private payments in favor of directly controlling healthcare prices and services.</p>
<h4>What Are the Multi-Payer Systems?</h4>
<p>In contrast to a single-payer system, numerous countries with universal healthcare systems employ multi-payer systems.<a class="see-footnote" id="footnoteref1_brs4lho" title="For a brief and recent summary of multi-payer systems, see page 16 of the Congressional Budget Office's May 2019 report, "Components of a Single-Payer System." https://www.cbo.gov/system/files/2019-05/55150-singlepayer.pdf" href="#footnote1_brs4lho">1</a></p>
<p>In the case of Germany, there are multiple statutory tiers of healthcare. Most Germans below a certain income level are covered by a main tier of heavily-subsidized health care. But service providers are not government owned, and they compete for customers at all income levels, including those who use private insurance.</p>
<p>Switzerland, meanwhile, employs a private-sector-based insurance mandate similar in some ways to Obamacare in the US. That is, the Swiss are required by law to purchase health insurance or face legal penalties. Low-income Swiss receive subsidies to purchase insurance. The Swiss system also allows for small fees to be paid by patients at each doctor visit, up to an annual maximum.</p>
<p>A key difference between US and Swiss insurance mandates, however, is that Swiss health insurance is purchased at the individual level, and not through employers.</p>
<p>These multi-tier systems — which also include France and the Netherlands, among others — are not free-market systems, of course. In all cases, markets are heavily regulated in terms of mandates that providers cover pre-existing conditions. Other regulations are used in attempts to control costs.</p>
<h4>Single-Payer: Bad for Both Freedom and Quality</h4>
<p>Indeed, the drive to control costs is a central reason for the single-payer healthcare system. By outlawing competition for many procedures, and by making healthcare providers dependent on a single governmental payer, it becomes easy for governments to force down prices by limiting payments to providers, and by dictating what sorts of treatments will be allowed.</p>
<p>But the ability to force down costs is not necessarily a great measure of a healthcare system's desirability.</p>
<p>A "cheap" healthcare system can certainly be achieved by imposing price controls, and cutting out pricey treatments deemed un-economical by state bureaucrats. But this often results in long waiting times and loss of quality. Not surprisingly, wait times for treatment have been <a href="https://www.cihi.ca/en/commonwealth-fund-survey-2016"> shown to be significantly longer </a> in Canada <a href="https://www.fraserinstitute.org/article/when-compared-to-similar-countries-canadas-health-care-wait-times-are-the-worst"> than in Germany, Switzerland, and France. </a></p>
<p>Moreover, by prohibiting competition in core services, providers lack an economic incentive to improve the quality of care. As <a href="http://www.civitas.org.uk/pdf/hpcgSystems.pdf">noted by</a> the UK's Civitas organization, competition among providers — even in a heavily regulated and subsidized systems — is important to encouraging quality services. Referring to the German system, the Civitas researchers note:</p>
<blockquote><p>Competing providers usually treat all patients but have an incentive to attract the high paying privately insured.This has a ‘levelling up’ effect on the quality of care available to all.</p></blockquote>
<p>Similar dynamics are true in Switzerland, and even in Denmark where the state encourages competition between hospitals. In the UK, on the other hand, the state controlled National Health Service has no reason to improve or innovate outside of public outrage. As George Pickering <a href="https://mises.org/wire/patients-are-%E2%80%9Cdying-corridors-britain%E2%80%99s-socialised-health-system"> has noted</a>, quality in the UK has become an increasing concern with honest observers of the British healthcare system. One recent open letter from British physicians to the Prime Minister</p>
<blockquote><p>further noted that it had become “routine” for patients to be left on gurneys in corridors for as long as 12 hours before being offered proper beds, with many of them eventually being put into makeshift wards hastily constructed in side-rooms. In addition to this, it was revealed that around 120 patients per day are being attended to in corridors and waiting rooms, with many being made to undergo humiliating treatments in the public areas of hospitals.</p></blockquote>
<p>Yet, apparently unaware of how other systems function, many British voters continue to support the British single-payer system uncritically. Pickering <a href="https://mises.org/wire/does-britain-have-world%E2%80%99s-best-health-system-only-if-you-ignore-outcomes"> continues</a>:</p>
<blockquote><p>the characteristics of the NHS [i.e., universal coverage] which Britons mistakenly believe to be a unique source of pride, are actually present in almost every other healthcare system in the developed world; yet these other systems lack the NHS’s hostility to innovation in medicines and practices. Furthermore, the high number of avoidable infant deaths in some of its trusts led to the NHS being brought under government investigation in April for standards of maternal care which regulators described as “truly shocking.”</p></blockquote>
<h4>The High Cost of Government Price Controls</h4>
<p>By allowing providers to compete, it's harder for governments to control costs. Thus, it's not surprising that when it comes to government spending on healthcare subsidies, the Netherlands, Switzerland, and Denmark are among the big spenders. In both Denmark and the Netherlands, about one third of the population chooses to buy private insurance.<a class="see-footnote" id="footnoteref2_sbi6uw7" title="See "Options for Healthcare Funding" by Civitas. Specifically: "In Denmark about 30% of the population choose to purchase private health insurance ... about one-third of the Dutch population (those above the upper national insurance threshold) are excluded from [government] insurance – nearly all choose to purchase private insurance." http://www.civitas.org.uk/pdf/hpcgSystems.pdf" href="#footnote2_sbi6uw7">2</a> (In Switzerland, of course, the system is <em>based</em> on mandatory private insurance.) Prices are thus bid up as a result, for both government and the private sector.</p>
<p>But, taxpayers and healthcare consumers also get what they pay for.</p>
<p>While multi-payer systems often tolerate higher prices in the name of better choice and higher quality, single-payer outlaw choice in the name of "savings."</p>
<p>Defenders of single-payer systems will justify these roadblocks to high-quality service as essential for maintaining "fairness." As Canadian historian <a href="https://mises.org/library/canadian-medicare-model-united-states">Ronald Hamowy has noted</a>, there has been opposition in Canada to allowing even small clinics performing diagnostic services like MRI scans. This, it was argued, would allow rich people to "jump the queue."</p>
<p>The message is thus this: either you get healthcare services on the government's terms, or you don't get it at all.</p>
<h4>Comparisons with the US System</h4>
<p>Politicians in the US are increasingly willing to force markets toward some sort of universal health system. This certainly has its downsides, but the most alarming aspect of the current drive is the fact many of the loudest voices for universal healthcare are insisting on single-payer healthcare as the only alternative.</p>
<p>But, if US policymakers are going to continue to move the US healthcare system even further away from functioning markets, less damage would be done by avoiding a single-payer system and instead embracing a multi-payer system.</p>
<p>After all, the US is already a non-universal multi-payer system, and the US already has a system that heavily subsidizes healthcare through programs like Medicaid and Medicare. In fact, <a href="https://mises.org/wire/half-health-spending-us-now-government-spending">nearly one-half of all healthcare spending in the US</a> is already paid by governments. And <a href="https://mises.org/wire/one-third-americans-are-government-healthcare">one-third of Americans already</a> receive healthcare through some sort of government program.</p>
<p>Transitioning to a universal healthcare system is going to be costly — in terms of dollars — no matter what. But by adopting a single-payer system, Americans would be forced to endure high costs that aren't calculated in dollars: long wait times, rationed care, and few choices beyond the government-controlled system.</p>
<p>The innovation, quality improvements, and timely care offered by competing private firms would be largely destroyed by adopting a single-payer system. Although these advantages have been only partially preserved by multi-payer systems that allow <em>some</em> of the advantages of a free marketplace, those now clamoring for a single-payer system would have us believe this all must be abolished in favor of near-total government control.</p>
<ul class="footnotes"><li class="footnote" id="footnote1_brs4lho"><a class="footnote-label" href="#footnoteref1_brs4lho">1.</a> For a brief and recent summary of multi-payer systems, see page 16 of the Congressional Budget Office's May 2019 report, "Components of a Single-Payer System." https://www.cbo.gov/system/files/2019-05/55150-singlepayer.pdf</li>
<li class="footnote" id="footnote2_sbi6uw7"><a class="footnote-label" href="#footnoteref2_sbi6uw7">2.</a> See "Options for Healthcare Funding" by Civitas. Specifically: "In Denmark about 30% of the population choose to purchase private health insurance ... about one-third of the Dutch population (those above the upper national insurance threshold) are excluded from [government] insurance – nearly all choose to purchase private insurance." http://www.civitas.org.uk/pdf/hpcgSystems.pdf</li>
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/1noMV5wV7g8" height="1" width="1" alt=""/>Ryan McMaken<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/health_0.PNG?itok=MCBvURSQ" width="240" alt="health_0.PNG" />46503May 17, 2019 - 1:15 PMFront page feedno In the United States, thanks largely to Bernie Sanders, the term "single-payer health care" has become more or less synonymous with the phrase "universal healthcare." This stems partially from the fact that "single-payer" is the term most often used to rRyan McMaken In the United States, thanks largely to Bernie Sanders, the term "single-payer health care" has become more or less synonymous with the phrase "universal healthcare." This stems partially from the fact that "single-payer" is the term most often used to refer to foreign systems of universal healthcare, and also because most Americans know virtually nothing about how foreign healthcare systems work. Moreover, when it comes to interacting with foreigners, Americans most often encounter the writings and opinion of other English speakers — which mostly means Canadians and British subjects. And it so happens both Canada and the United Kingdom employ single-payer healthcare systems. Elsewhere in the world, however, it is not uncommon to find other countries that employ "multi-payer" and "multi-tier" healthcare systems that are nonetheless designed to provide universal coverage. This is also especially important to recognize because single-payer healthcare systems are some of the worst systems in regards to freedom of choice and healthcare quality. This is because the primary benefit of single-payer healthcare — as so often recounted by its supporters — is that it is cheap. But "cheapness" is not exactly the best criteria for judging a healthcare system, and the shortcomings of single-payer systems make this abundantly clear. What Is Single-Payer? So what makes a single-payer system distinct from other systems? As the name implies, a single-payer system is one in which there is only one source of payments or funding for healthcare transactions. This source, of course, is the government. So, in a single-payer system healthcare services is paid for only through government funding. This can be done through a variety of mechanisms. For example, healthcare facilities can be directly funded and run by government agencies or they can be nominally private providers which receive all their payments from a government agency. With single-payer systems there is no competition from other "payers" such as private insurance companies, or even cash-for-service firms. Exceptions can be found in those services that are not deemed to be "essential" healthcare services. In Canada, for example, private health services are allowed in services legally defined as non-essential such as mental health, pharmaceuticals, some types of eye care, and long-term care. Thus, strictly speaking, no system is a "pure" single-payer system that encompasses every conceivable type of care. Consequently, in both the UK and Canada, one will still encounter activists who think that the state-run healthcare systems are too laissez-faire. These critics claim coverage should be expanded to exclude private competition even more, and to expand the definition of "essential" services. It is not uncommon to hear claims that these systems are becoming "two-tier systems" (meant pejoratively) in which the implication is that there is one low-quality tier for ordinary people, and a high-quality tier for everyone else. In practice, however, there is a reason most of the world points to the United Kingdom and Canada as examples of single-payer systems: they offer very few private-sector options for core services. While there are always some areas where private-sector activity allowed, these systems are fundamentally built on the idea of excluding private competition and private payments in favor of directly controlling healthcare prices and services. What Are the Multi-Payer Systems? In contrast to a single-payer system, numerous countries with universal healthcare systems employ multi-payer systems.1 In the case of Germany, there are multiple statutory tiers of healthcare. Most Germans below a certain income level are covered by a main tier of heavily-subsidized health care. But service providers are not government owned, and they compete for customers at all income levels, including those who use private insurance. Switzerland, meanwhile, employs a private-sector-based insurance mandate sAustrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46503Do We Really Have a Decade Left to Solve Climate Change?http://feedproxy.google.com/~r/MisesMedia/~3/2utWAmD7atw/46461
<p>Wise alecks on social media noted with amusement how Beto O’Rourke recently claimed humans <a href="https://www.youtube.com/watch?v=mNrqnOTRlBM">had only <em>ten </em>years</a> to act on climate change, thus one-upping Alexandria Ocasio-Cortez who had previously gone out on a limb by putting the <a href="https://www.youtube.com/watch?v=oHk8nn0nw18">deadline at <em>twelve </em>years</a>. Snark aside, it’s important to point out that the “consensus science” as codified, for example, in the periodic reports from the United Nations do not support such a cliff-hanger mentality at all.</p>
<h4><strong>Our Political Figures Ignore the IPCC</strong></h4>
<p>The quickest way to make this point is to reproduce something I highlighted several years ago in <a href="https://www.instituteforenergyresearch.org/climate-change/krugman-ignores-ipcc-climate-economics/">an IER post</a> where I caught Paul Krugman just making up stuff about climate change. Specifically, the following table comes from the latest Intergovernmental Panel on Climate Change (IPCC) report, the AR5 (Table SPM.2):</p>
<div class="media media-element-container media-image_no_caption media-wysiwyg-align-center"><a href="https://mises-media.s3.amazonaws.com/styles/max_1160/s3/IPCC1.png?itok=3xmlh1id" title="IPCC1.png" class="colorbox" data-colorbox-gallery="gallery-file-83578-yTnT59RW67M" data-cbox-img-attrs="{"title": "", "alt": ""}"><img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/max_full/s3/IPCC1.png?itok=ULjUvjj5" width="693" height="274" alt="IPCC1.png" title="" /></a></div>
<h6 class="text-center"><a href="https://www.ipcc.ch/site/assets/uploads/2018/02/ipcc_wg3_ar5_summary-for-policymakers.pdf">Source: IPCC AR5, Working Group III, Summary for Policymakers</a></h6>
<p>To make it easier to read, I’ll excerpt the relevant left and right portions of the table below:</p>
<div class="media media-element-container media-image_no_caption media-wysiwyg-align-center"><a href="https://mises-media.s3.amazonaws.com/styles/max_1160/s3/Screen-Shot-2019-05-09-at-9.47.20-AM.png?itok=JA8p7Vdd" title="Screen-Shot-2019-05-09-at-9.47.20-AM.png" class="colorbox" data-colorbox-gallery="gallery-file-83579-yTnT59RW67M" data-cbox-img-attrs="{"title": "", "alt": ""}"><img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/max_full/s3/Screen-Shot-2019-05-09-at-9.47.20-AM.png?itok=DLfDO3l9" width="614" height="431" alt="Screen-Shot-2019-05-09-at-9.47.20-AM.png" title="" /></a></div>
<h6 class="text-center">SOURCE: Adapted from IPCC AR5, Working Group III, <a href="https://www.ipcc.ch/site/assets/uploads/2018/02/ipcc_wg3_ar5_summary-for-policymakers.pdf">Summary for Policymakers</a>, Table SPM.2</h6>
<p>There’s a lot of information in the table, but let me summarize the important elements vis-à-vis the recent claims from O’Rourke and Ocasio-Cortez. The beige cells in the adapted table above show the percentage increases in the total (undiscounted) mitigation costs necessary to achieve the far-left (white cells) atmospheric concentrations of greenhouse gases in the year 2100, for the years 2030-2050 and also for 2050-2100, for two different scenarios of total emissions (either below 55 gigatons of CO<sub>2</sub>-equivalent, or above).</p>
<p>In other words, the beige cells show us how much a delay of government action through the year 2030 will <em>increase </em>the cost necessary to achieve the specified atmospheric concentrations for the year 2100 (white cells). Specifically, the beige cells show that by “doing nothing” about climate change until the year 2030, even in a high-emission baseline scenario, the IPCC’s best guess of the cost of achieving the aggressive outcome rises by 44 percent in the years 2030-2050 and 37 percent in the years 2050-2100.</p>
<p>Now to be sure, the rhetorical point of the above table in the AR5 was to <em>encourage support for climate mitigation policies</em>. The people who put together this table for policymakers wanted to show, “Hey, since we’re obviously going to have to deal with climate change eventually, we might as well get going, because the longer we delay, the more expensive it will be.”</p>
<h4><strong>IPCC: An Inconvenient Truth</strong></h4>
<p>My modest point here, however, is to show that this table now poses an awkward stumbling block for those—like <a href="https://www.masterresource.org/orourke-beto/beto-is-putting-climate-first-chronicles-from-a-failing-campaign/">O’Rourke</a> and <a href="https://www.instituteforenergyresearch.org/regulation/the-outrageous-cost-of-the-green-new-deal/">Ocasio-Cortez</a>—trying to scare people into supporting ludicrously expensive and aggressive proposals to “fight climate change.” If O’Rourke and Ocasio-Cortez were anywhere close to being correct when issuing their ever-shrinking windows for action, then in the IPCC table above, the beige cells should have all had infinity signs, and in a footnote it would explain: “If we wait until 2030 to begin mitigation efforts, we will all die.”</p>
<p>But that’s <em>not </em>what the UN report told us. Instead, it reported that yes, the costs of achieving various climate targets (as measured by atmospheric concentrations of CO<sub>2</sub> in the year 2100) would be higher due to delay, but even in a pessimistic scenario, the best-guess of the cost increase was 44 percent.</p>
<h4><strong>Conclusion</strong></h4>
<p>In this post, I highlighted one particular table from the most recent UN report on the science of climate change in order to show just how baseless are the recent claims that humans have <em>x </em>years to act on climate change. Over at Reason, <a href="https://reason.com/2019/04/05/rep-alexandria-ocasio-cortez-is-wrong-th/">Ronald Bailey marshals more evidence</a>—again, from the very “consensus science” documents we are supposed to rely on—to show that these claims are nonsense.</p>
<p>This whole episode is yet another example demonstrating the farce of the climate change policy debate. Whenever a critic disagrees with the most radical proposals that would—according to their own proponents—transform Western society, the critic is berated as a science denier. And yet, even a cursory examination of the actual technical reports shows that the prophets of doom are the ones who are spouting forth unsupported claims.</p>
<h6><em>Originally published at the <a href="https://www.instituteforenergyresearch.org/climate-change/do-we-really-have-a-decade-left-to-solve-climate-change/">Institute for Energy Research</a></em></h6><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/2utWAmD7atw" height="1" width="1" alt=""/>Robert P. Murphy<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/static-page/img/End%20is%20Beto2_0.png?itok=pxD3FhR7" width="240" alt="End is Beto2_0.png" />46461May 17, 2019 - 11:00 AMFront page feedno Wise alecks on social media noted with amusement how Beto O’Rourke recently claimed humans had only ten years to act on climate change, thus one-upping Alexandria Ocasio-Cortez who had previously gone out on a limb by putting the deadline at twelve yearsRobert P. Murphy Wise alecks on social media noted with amusement how Beto O’Rourke recently claimed humans had only ten years to act on climate change, thus one-upping Alexandria Ocasio-Cortez who had previously gone out on a limb by putting the deadline at twelve years. Snark aside, it’s important to point out that the “consensus science” as codified, for example, in the periodic reports from the United Nations do not support such a cliff-hanger mentality at all. Our Political Figures Ignore the IPCC The quickest way to make this point is to reproduce something I highlighted several years ago in an IER post where I caught Paul Krugman just making up stuff about climate change. Specifically, the following table comes from the latest Intergovernmental Panel on Climate Change (IPCC) report, the AR5 (Table SPM.2): Source: IPCC AR5, Working Group III, Summary for Policymakers To make it easier to read, I’ll excerpt the relevant left and right portions of the table below: SOURCE: Adapted from IPCC AR5, Working Group III, Summary for Policymakers, Table SPM.2 There’s a lot of information in the table, but let me summarize the important elements vis-à-vis the recent claims from O’Rourke and Ocasio-Cortez. The beige cells in the adapted table above show the percentage increases in the total (undiscounted) mitigation costs necessary to achieve the far-left (white cells) atmospheric concentrations of greenhouse gases in the year 2100, for the years 2030-2050 and also for 2050-2100, for two different scenarios of total emissions (either below 55 gigatons of CO2-equivalent, or above). In other words, the beige cells show us how much a delay of government action through the year 2030 will increase the cost necessary to achieve the specified atmospheric concentrations for the year 2100 (white cells). Specifically, the beige cells show that by “doing nothing” about climate change until the year 2030, even in a high-emission baseline scenario, the IPCC’s best guess of the cost of achieving the aggressive outcome rises by 44 percent in the years 2030-2050 and 37 percent in the years 2050-2100. Now to be sure, the rhetorical point of the above table in the AR5 was to encourage support for climate mitigation policies. The people who put together this table for policymakers wanted to show, “Hey, since we’re obviously going to have to deal with climate change eventually, we might as well get going, because the longer we delay, the more expensive it will be.” IPCC: An Inconvenient Truth My modest point here, however, is to show that this table now poses an awkward stumbling block for those—like O’Rourke and Ocasio-Cortez—trying to scare people into supporting ludicrously expensive and aggressive proposals to “fight climate change.” If O’Rourke and Ocasio-Cortez were anywhere close to being correct when issuing their ever-shrinking windows for action, then in the IPCC table above, the beige cells should have all had infinity signs, and in a footnote it would explain: “If we wait until 2030 to begin mitigation efforts, we will all die.” But that’s not what the UN report told us. Instead, it reported that yes, the costs of achieving various climate targets (as measured by atmospheric concentrations of CO2 in the year 2100) would be higher due to delay, but even in a pessimistic scenario, the best-guess of the cost increase was 44 percent. Conclusion In this post, I highlighted one particular table from the most recent UN report on the science of climate change in order to show just how baseless are the recent claims that humans have x years to act on climate change. Over at Reason, Ronald Bailey marshals more evidence—again, from the very “consensus science” documents we are supposed to rely on—to show that these claims are nonsense. This whole episode is yet another example demonstrating the farce of the climate change policy debate. Whenever a critic disagrees with the most radical proposals that would—according to their own proponents—transform Western society, tAustrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46461The Lessonhttp://feedproxy.google.com/~r/MisesMedia/~3/a5fa0Gd2Wuo/46497
<p>The whole of economics can be reduced to a single lesson, and that lesson can be reduced to a single sentence:</p>
<blockquote><p>The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.</p></blockquote>
<p>Excerpted from <em>Economics in One Lesson</em>, pp. 3-7.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/a5fa0Gd2Wuo" height="1" width="1" alt=""/>Henry Hazlitt<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/static-page/img/MisesU_ReqReadingsAudio_750x516_20190516.jpg?itok=hIeuJyis" width="240" alt="Mises University Required Reading" title="Mises University Required Reading" />46497May 17, 2019 - 11:00 AMFront page feedno The whole of economics can be reduced to a single lesson, and that lesson can be reduced to a single sentence: The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing theHenry Hazlitt The whole of economics can be reduced to a single lesson, and that lesson can be reduced to a single sentence: The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups. Excerpted from Economics in One Lesson, pp. 3-7. Austrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46497The Gateway Drug Mythhttp://feedproxy.google.com/~r/MisesMedia/~3/GEuxXMdrUPA/46496
<p>The <em>Time</em> magazine article creating "the gateway drug" myth in the 1970s provided no citations for its claims, except ambiguous references to unnamed “experts.” The evidence remains elusive forty years later.</p>
<p>Original Article: <a href="https://mises.org/wire/gateway-drug-myth" target="_blank">"The Gateway Drug Myth"</a>.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/GEuxXMdrUPA" height="1" width="1" alt=""/>Chris Calton<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/static-page/img/AudioMisesWire_750x516_20180223.jpg?itok=5JRlqpkV" width="240" alt="Audio Mises Wire" title="Audio Mises Wire" />46496May 17, 2019 - 10:30 AMFront page feedno The Time magazine article creating "the gateway drug" myth in the 1970s provided no citations for its claims, except ambiguous references to unnamed “experts.” The evidence remains elusive forty years later. Original Article: "The Gateway Drug Myth". Chris Calton The Time magazine article creating "the gateway drug" myth in the 1970s provided no citations for its claims, except ambiguous references to unnamed “experts.” The evidence remains elusive forty years later. Original Article: "The Gateway Drug Myth". Austrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46496The Gateway Drug Mythhttp://feedproxy.google.com/~r/MisesMedia/~3/75-A-PxVpxI/46478
<p><strong>Listen to <a href="https://mises.org/library/gateway-drug-myth">the <em>Audio Mises Wire</em> version</a> of this article.</strong></p>
<p>Since Joe Biden’s recent announcement that he’s throwing his hat in the 2020 presidential ring, his abysmal stance on the War on Drugs has been the source of a great deal of criticism, even from those inclined to support him. Four years ago, he claimed that he opposed the legalization of cannabis because he still believed it to be a gateway drug — <a href="https://www.rollingstone.com/culture/culture-features/joe-biden-weed-war-drugs-candidate-2020-827319/"> a position he appears to maintain</a>. The gateway theory of marijuana is roughly as old as Biden himself, but as is so often the case with propagandized narratives, history reveals a lot about the policy.</p>
<p>When Congress was first debating the bill that criminalized marijuana in 1937, Harry Anslinger—the godfather of the War on Drugs—rejected any notion that marijuana use led to other drugs. <a href="http://www.druglibrary.org/schaffer/hemp/taxact/anslng1.htm"> During the marijuana hearings</a>, Representative John Dingell asked Anslinger, “I am just wondering whether the marijuana addict graduates into a heroin, an opium, or a cocaine user?” Anslinger replied, “No, sir. I have not heard of a case of that kind. I think it is an entirely different class. The marijuana addict does not go in that direction.”</p>
<p>When the Cold War started, the narrative changed. As politicians mongered fear about communist takeovers, the narrative for marijuana use shifted to mirror Red Scare talking points. According to the “domino theory,” the Cold War was necessary because once one country fell to communism, the rest would supposedly fall. Although the domino analogy was originally proposed by President Dwight Eisenhower in 1954, the origins of the idea are found in the Truman Doctrine of the 1940s.</p>
<p>In 1951, Anslinger adapted this logic to cannabis in a complete contradiction of his 1937 statements. At the time, it was referred to as the “progression theory” or the “stepping-stone thesis,” before the term “gateway drug” gained currency. During the Boggs Act Hearings, Anslinger said, “Over 50 percent of these young addicts started on marijuana smoking. They started there and graduated to heroin; they took the needle when the thrill of marihuana was gone.”<a class="see-footnote" id="footnoteref1_gysyhl9" title="United States Congress Senate Committee on the Judiciary Subcommittee to Investigate Juvenile Delinquency, Marijuana Decriminalization: Hearing Before the Subcommittee to Investigate Juvenile Delinquency of the Committee on the Judiciary, United States Senate, Ninety-Fourth Congress, First Session ... May 14, 1975 (U.S. Government Printing Office, 1975), 485–86." href="#footnote1_gysyhl9">1</a></p>
<p>It is not actually clear that the gateway drug theory was based on the Cold War ideas about the spread of communism, but the parallels are remarkable and the timing is revealing. On other marijuana claims, the connection to the Cold War was even more explicit. In 1948, Anslinger argued that marijuana use “leads to pacifism and Communist brainwashing”—another 180 degree turn from his early claim that marijuana was “the most violence-causing drug in the history of mankind.”<a class="see-footnote" id="footnoteref2_fu904uw" title="Martin A. Lee, Smoke Signals: A Social History of Marijuana - Medical, Recreational and Scientific (New York: Simon and Schuster, 2013), 62." href="#footnote2_fu904uw">2</a></p>
<p>The marriage between the Cold War and the gateway drug theory survived through the end of the Vietnam War. As the United States was losing the war in Indochina, James Eastland held hearings to investigate how marijuana use affected U.S. security. The purpose of the hearings was to discredit Nixon’s own marijuana commission, which concluded—much to Nixon’s chagrin—that marijuana had no significant harmful effects and recommended decriminalization. Eastland’s hearings sought to use the Vietnam War to counter the commission’s findings. One of his talking points was that marijuana led soldiers to heroin, and this was undermining the war effort. In other words, because cannabis was a gateway drug, American safety was at risk.</p>
<p>Of course, he neglected to mention that heroin use among American GIs only increased after the army started cracking down on marijuana use in the late 1960s. When the Pentagon sent a researcher to Vietnam to study the success of its anti-marijuana policies, the researcher said, “Human ingenuity being what it is—and the desire for an intoxicant in Vietnam being what it was—many soldiers simply switched [to heroin].” One high ranking officer in Vietnam recognized the consequences as well, stating that “If it would get [the soldiers] to give up the hard stuff, I would buy all the marijuana and hashish in the Delta as a present.”<a class="see-footnote" id="footnoteref3_ho6jj4g" title="Dan Baum, Smoke and Mirrors: The War on Drugs and the Politics of Failure (New York: Little, Brown and Company, 1996), 50." href="#footnote3_ho6jj4g">3</a><br /><br />In other words, marijuana did not drive soldiers to heroin; the military crackdown on marijuana did. But this hardly mattered to Eastland and other anti-drug politicians. All they needed to know was that widespread marijuana use preceded widespread heroin addiction. Without all the pesky details, the statistics fit their theory perfectly.</p>
<p>The 1970s also saw the media jumping in to support the gateway theory. <em>Time </em>magazine ran a story titled “Kids and Heroin: The Adolescent Epidemic” that claimed, “If a young person smokes marijuana on more than ten occasions, the chances are one in five that he will go on to more dangerous drugs.” At the time, most people were only concerned with heroin, if anything, and kids were not using heroin. But if you want to sell the news, as William Randolph Hearst famously prescribed, you need to do stories featuring a pretty girl, a dog, or a child. The gateway theory gave <em>Times</em> and other publications a way to link heroin to adolescents even though virtually zero high schoolers used the drug. The article gave no citations for its claims, except ambiguous references to unnamed “experts.”</p>
<p>In the 1980s, the gateway theory became the focal point of anti-marijuana rhetoric. Reagan’s drug czar, Carlton Turner, touted a study that “proved” marijuana caused heroin use. The study in question looked only at cocaine and heroin users, asking if they had first used marijuana (it asked no questions about tobacco, alcohol, or caffeine). Activist Susan Rusche coined the term “pre-addicted” to describe recreational marijuana users. Bob DuPont, Director of the National Institute on Drug Abuse, published the book <em>Getting Tough on Gateway Drugs.</em> By the time Joe Biden helped author the 1986 Anti-Drug Abuse Act, the gateway theory had become holy doctrine.</p>
<p>But the Gateway Theory was based on logic that is simultaneously undeniably true and entirely misleading. As Anslinger pointed out, most people addicted to hard drugs first used marijuana. The trend is true today. In a recent attempt to resurrect Anslinger’s original marijuana narrative, novelist and <em>New York Times </em>journalist Alex Berenson cites a study by a Columbia psychologist claiming that people who used cannabis were more likely to use opiates than people who had never used cannabis.<a class="see-footnote" id="footnoteref4_5l225zw" title="Alex Berenson, Tell Your Children: The Truth About Marijuana, Mental Illness, and Violence (New York: Free Press, 2019), 113." href="#footnote4_5l225zw">4</a></p>
<p>This is all true. It is also true that water runs downhill, which we hardly need an Ivy League study to demonstrate. If the starting point of an investigation is hard drugs, it is entirely predictable that addicts would have used softer intoxicants first. That’s the natural progression of any human activity. Weightlifters start with smaller weights before moving on to heavier ones. Readers who enjoy Leo Tolstoy often first read Dr. Seuss. People who use harder intoxicants understandably started with softer ones.</p>
<p>Among Berenson’s favorite pieces of evidence are two studies that involve twins. Essentially, the logic of twin studies is that researchers can control for genetic and environmental factors better than with any other pair of individuals. In cases in which only one twin used marijuana, that twin was far more likely to use harder drugs.<a class="see-footnote" id="footnoteref5_g54msma" title="Berenson, 108." href="#footnote5_g54msma">5</a> But there is an underlying logical flaw here, as well. If genetics and environment are roughly held constant, what factors explain why only one of the twins chose to experiment with marijuana to begin with? The entire premise of twin studies should exclude this as a reasonable possibility from the outset.</p>
<p>The problem is that the studies touted by proponents of the gateway theory only look in one direction—they start with hard users and ask if they first used marijuana. Studies that begin with marijuana users tell a different story. If the gateway theory is true, increases in cannabis use should be accompanied by increases in harder drugs. This trend is not supported by the evidence. Over the decades, marijuana use has moved up and down according to the cultural trends of the day, <a href="https://www.bakerinstitute.org/bennett-charts/"> but use of all other drugs has remained largely level</a>. Even where we do see increases in heroin use, for instance, it fails to track with marijuana use — <a href="https://d14rmgtrwzf5a.cloudfront.net/sites/default/files/19774-prescription-opioids-and-heroin_0.pdf"> though it does track with prescription opioids</a>.</p>
<p>While the gateway theory was gaining religious acceptance, a panoply of studies was being produced contradicting it. In 1982, the National Academy of Sciences weighed the scholarship on both sides of the debate in <em>An Analysis of Marijuana Policy</em> and concluded that there was no discernible link between marijuana use and harder drugs. In 1999, the Academy’s Institute of Medicine published an even broader study, <em> <a href="https://medicalmarijuana.procon.org/sourcefiles/IOM_Report.pdf"> Marijuana as Medicine: Assessing the Science Base</a></em>, which not only touted several studies about the medical applications of cannabis, but it also addressed the gateway theory.</p>
<p>Although the study is careful not to take a firm position on anything, it notes that “most drug users do not begin their drug use with marijuana—they begin with alcohol and nicotine, usually when they are too young to do so legally.” It also adds it is not that the “pharmacological qualities of marijuana make it a risk factor for progression to other drugs. Instead, the legal status of marijuana makes it a gateway drug.” In short, to the degree that marijuana is a “stepping stone” to harder drugs, it is because users who find out that what they were taught about the dangers of marijuana was largely untrue, they are more likely to experiment with genuinely dangerous substances.</p>
<p>The gateway theory survives despite a mountain of evidence to the contrary. It is an obvious truism that hard-drug users usually begin with marijuana—as well as tobacco, alcohol, and other substances—but the data clearly suggests no correlation between cannabis use and the adoption of hard drugs.</p>
<p>So why does Joe Biden, along with so many other politicians, stick with the gateway drug theory? It is impossible to say, of course, without access to his inner thoughts. But for a man who quite literally made his career as a drug hawk, the narrative about drugs has served him well politically.</p>
<p>Many people still buy into the old myths, especially when the propagation of information has so disproportionately focused on the arguments that confirm anti-marijuana biases—and demagoguery wins elections. Voters are divided in their support of marijuana decriminalization more by age than party. As more democratic candidates support legalization, Biden’s hard stance against decriminalization and adherence to the Reagan-era narrative, particularly given the constancy of his record as a drug warrior, is a great way to set himself apart from the numerous contenders for the nomination.</p>
<ul class="footnotes"><li class="footnote" id="footnote1_gysyhl9"><a class="footnote-label" href="#footnoteref1_gysyhl9">1.</a> United States Congress Senate Committee on the Judiciary Subcommittee to Investigate Juvenile Delinquency, <em> Marijuana Decriminalization: Hearing Before the Subcommittee to Investigate Juvenile Delinquency of the Committee on the Judiciary, United States Senate, Ninety-Fourth Congress, First Session ... May 14, 1975 </em> (U.S. Government Printing Office, 1975), 485–86.</li>
<li class="footnote" id="footnote2_fu904uw"><a class="footnote-label" href="#footnoteref2_fu904uw">2.</a> Martin A. Lee, <em> Smoke Signals: A Social History of Marijuana - Medical, Recreational and Scientific </em> (New York: Simon and Schuster, 2013), 62.</li>
<li class="footnote" id="footnote3_ho6jj4g"><a class="footnote-label" href="#footnoteref3_ho6jj4g">3.</a> Dan Baum, <em> Smoke and Mirrors: The War on Drugs and the Politics of Failure </em> (New York: Little, Brown and Company, 1996), 50.</li>
<li class="footnote" id="footnote4_5l225zw"><a class="footnote-label" href="#footnoteref4_5l225zw">4.</a> Alex Berenson, <em> Tell Your Children: The Truth About Marijuana, Mental Illness, and Violence </em> (New York: Free Press, 2019), 113.</li>
<li class="footnote" id="footnote5_g54msma"><a class="footnote-label" href="#footnoteref5_g54msma">5.</a> Berenson, 108.</li>
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/75-A-PxVpxI" height="1" width="1" alt=""/>Chris Calton<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/drugmyth.PNG?itok=xclcGtGD" width="240" alt="drugmyth.PNG" />46478May 17, 2019 - 6:00 AMFront page feedno Listen to the Audio Mises Wire version of this article. Since Joe Biden’s recent announcement that he’s throwing his hat in the 2020 presidential ring, his abysmal stance on the War on Drugs has been the source of a great deal of criticism, even from thoChris Calton Listen to the Audio Mises Wire version of this article. Since Joe Biden’s recent announcement that he’s throwing his hat in the 2020 presidential ring, his abysmal stance on the War on Drugs has been the source of a great deal of criticism, even from those inclined to support him. Four years ago, he claimed that he opposed the legalization of cannabis because he still believed it to be a gateway drug — a position he appears to maintain. The gateway theory of marijuana is roughly as old as Biden himself, but as is so often the case with propagandized narratives, history reveals a lot about the policy. When Congress was first debating the bill that criminalized marijuana in 1937, Harry Anslinger—the godfather of the War on Drugs—rejected any notion that marijuana use led to other drugs. During the marijuana hearings, Representative John Dingell asked Anslinger, “I am just wondering whether the marijuana addict graduates into a heroin, an opium, or a cocaine user?” Anslinger replied, “No, sir. I have not heard of a case of that kind. I think it is an entirely different class. The marijuana addict does not go in that direction.” When the Cold War started, the narrative changed. As politicians mongered fear about communist takeovers, the narrative for marijuana use shifted to mirror Red Scare talking points. According to the “domino theory,” the Cold War was necessary because once one country fell to communism, the rest would supposedly fall. Although the domino analogy was originally proposed by President Dwight Eisenhower in 1954, the origins of the idea are found in the Truman Doctrine of the 1940s. In 1951, Anslinger adapted this logic to cannabis in a complete contradiction of his 1937 statements. At the time, it was referred to as the “progression theory” or the “stepping-stone thesis,” before the term “gateway drug” gained currency. During the Boggs Act Hearings, Anslinger said, “Over 50 percent of these young addicts started on marijuana smoking. They started there and graduated to heroin; they took the needle when the thrill of marihuana was gone.”1 It is not actually clear that the gateway drug theory was based on the Cold War ideas about the spread of communism, but the parallels are remarkable and the timing is revealing. On other marijuana claims, the connection to the Cold War was even more explicit. In 1948, Anslinger argued that marijuana use “leads to pacifism and Communist brainwashing”—another 180 degree turn from his early claim that marijuana was “the most violence-causing drug in the history of mankind.”2 The marriage between the Cold War and the gateway drug theory survived through the end of the Vietnam War. As the United States was losing the war in Indochina, James Eastland held hearings to investigate how marijuana use affected U.S. security. The purpose of the hearings was to discredit Nixon’s own marijuana commission, which concluded—much to Nixon’s chagrin—that marijuana had no significant harmful effects and recommended decriminalization. Eastland’s hearings sought to use the Vietnam War to counter the commission’s findings. One of his talking points was that marijuana led soldiers to heroin, and this was undermining the war effort. In other words, because cannabis was a gateway drug, American safety was at risk. Of course, he neglected to mention that heroin use among American GIs only increased after the army started cracking down on marijuana use in the late 1960s. When the Pentagon sent a researcher to Vietnam to study the success of its anti-marijuana policies, the researcher said, “Human ingenuity being what it is—and the desire for an intoxicant in Vietnam being what it was—many soldiers simply switched [to heroin].” One high ranking officer in Vietnam recognized the consequences as well, stating that “If it would get [the soldiers] to give up the hard stuff, I would buy all the marijuana and hashish in the Delta as a present.”3 In other words, marijuana did not drive soldiers to heroin; the mAustrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46478The Individual in Societyhttp://feedproxy.google.com/~r/MisesMedia/~3/cN1jq0E62cs/46489
<p>Those who are asking for more government interference are asking ultimately for more compulsion and less freedom.</p>
<p>Excerpted from <em>Economic Freedom and Interventionism</em>.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/cN1jq0E62cs" height="1" width="1" alt=""/>Ludwig von Mises<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/static-page/img/MisesU_ReqReadingsAudio_750x516_20190516.jpg?itok=hIeuJyis" width="240" alt="Mises University Required Reading" title="Mises University Required Reading" />46489May 16, 2019 - 4:30 PMFront page feedno Those who are asking for more government interference are asking ultimately for more compulsion and less freedom. Excerpted from Economic Freedom and Interventionism. Ludwig von Mises Those who are asking for more government interference are asking ultimately for more compulsion and less freedom. Excerpted from Economic Freedom and Interventionism. Austrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46489Schumpeter vs. Kirzner on Entrepreneurshttp://feedproxy.google.com/~r/MisesMedia/~3/x6EPYGDOemo/46462
<p>[<em>This is a selection from "Driving the Market Process: 'Alertness' Versus Innovation and 'Creative Destruction'" in the Quarterly Journal of Austrian Economics. The full article is <a href="https://mises.org/library/driving-market-process-alertness-versus-innovation-and-creative-destruction">here</a>.</em>]</p>
<p>Joseph Schumpeter’s theory of entrepreneurship significantly differs from that of Israel Kirzner. This is particularly apparent in Schumpeter’s argument that entrepreneurial activity is characteristic of both market and non-market economies and similarly drives their development. His explanation reveals his moorings in conventional neoclassical microeconomic theory, rather than in Austrian School market process theory.</p>
<p>There are several serious flaws in Schumpeter’s theory of entrepreneurship. The Walrasian general equilibrium model on which he bases his theories of development and business cycles profoundly misrepresents the market process for reasons extensively treated elsewhere—particularly in the critiques of Mises and other Austrian School theorists. This is apparently what leads him to apply his entrepreneurial deus ex machina to both market and non-market contexts to the detriment of an understanding of either. In addition, his entrepreneurial <em>deus ex machina</em> as disruptor of general equilibrium lacks reasoned motivation. It is not a pursuer of profit opportunities, it is a Prometheus without a first cause, a mere pragmatic device to get things going. Schumpeter’s approach even runs opposite to the 1870s Marginal Revolution shift from production-driven to consumer-driven market process theory. His consumers are the tail that is wagged by the entrepreneurial dog.</p>
<p>Schumpeter also posits innovations as acts of entrepreneurship without an explanation of the source of the “new possibilities” that are used in innovation. He denies that they are found or created by entrepreneurship; they just come into existence somehow, lie about for awhile, are stumbled upon and get applied. His perfect knowledge assumption for a general equilibrium to exist in a market economy actually removes any rational source for entrepreneurial activity.</p>
<p>Kirzner’s theory of entrepreneurship has obvious and substantial moorings in Austrian School market process theory as it has developed through the work of Menger, Mises, and Hayek. His extensive development of the specifics of the entrepreneurial aspect of human action has added significantly to our understanding of it. In sharp contrast to Schumpeter’s ad hoc <em>deus ex machina</em>, Kirzner’s entrepreneurial concept is founded on consumer sovereignty and enhances our understanding of how the market process aids individuals in their attempts to achieve chosen ends.</p>
<p>Nevertheless, there are discordant elements in Kirzner’s vision. To find the essence of entrepreneurship in “alertness” to profit opportunities is insightful, but there must be more to it than that. It takes an act of will to be alert, and a further act of will to decide to do something about it. The capacity to be alert to opportunities and to strive to profit from them is gutsy and not always present all the time or in all people.</p>
<p>Further, Kirzner’s own comparison of his concept of entrepreneurship with that of Schumpeter is inadequate in that he accedes to Schumpeter’s “ideal type” view of “the entrepreneur,” rather than being—as Kirzner himself recognizes—an aspect of human consciousness present in exchange relations. He does this when he characterizes the difference between their respective views as one between that of the entrepreneur as disrupter of equilibrium versus that of equilibrator, thus leaving out the ignorance, uncertainty, and purposefulness that give rise to the entrepreneurial aspect of all human action only in the market process.</p>
<p>It is also difficult to separate innovation from entrepreneurship, if entrepreneurship is entwined with “boldness, self-confidence, creativity and innovative ability,” as Kirzner says it is. Expanding the definition of “arbitrage” to include innovation seems more like a slight of the hand than an argument. A focused alertness to possible market profit opportunities—of whatever sort—and the will to pursue them seems a necessary part of the concept of entrepreneurship. Kirzner’s later writings appear to concede this.<a href="https://mises.org/library/driving-market-process-alertness-versus-innovation-and-creative-destruction#footnote54_d23e1kb" id="footnoteref54_d23e1kb" title="Holcombe (1998) usefully applies the Kirznerian theory of entrepreneurial innovation to economic growth theory by adding the element of past entrepreneurial activity as generator of opportunities for new entrepreneurial activity, thus making Kirznerian entrepreneurship “the engine of economic growth.” A taxonomy of possible sources of entrepreneurial profit opportunities, including past entrepreneurial activity, is found in Holcombe (2003a). Holcombe (2003b, p. 12) notes that Hayek’s concept of the importance of the particular knowledge of time and place suggests the parochial aspect of entrepreneurship. Fu-Lai Yu (1998) applies the Kirznerian theory to the development of emerging economies, attempting to broaden the approach and to combine it with the Schumpeterian theory in a basically neo-institutionalist explanation of likely development and growth paths, given certain behavioral, institutional, and historical assumptions."> </a></p>
<p>Lastly, the comparison between the two theories of entrepreneurial action suggest that it may be time to drop the use of the words “equilibrium” and “disequilibrium” from economics. The market process is not about attaining “equilibrium,” whether temporary or terminal. It is about purposive individuals seeking to achieve personal goals through exchange with others in a context of ignorance and uncertainty that requires speculation.<a href="https://mises.org/library/driving-market-process-alertness-versus-innovation-and-creative-destruction#footnote55_r4dok1t" id="footnoteref55_r4dok1t" title="Fu-Lai Yu (2001, p. 49) refreshingly expresses the same opinion, using it narrowly to dismiss the usual contrast between Kirznerian (equilibrative) and Schumpeterian (disequilibrative) entrepreneurship."> </a> Market exchange is just one of the means for the peaceful pursuit of human ends. The language of classical mechanics provides inappropriate metaphors for the explanation of the process of market exchange. The first law of thermodynamics applies only to physical science phenomena, not to catallactics, which is a science of human action in which value is created rather than being equilibrated or merely not lost.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/x6EPYGDOemo" height="1" width="1" alt=""/>Samuel Bostaph<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/dea.PNG?itok=wac327RB" width="240" alt="dea.PNG" />46462May 16, 2019 - 2:00 PMFront page feedno [This is a selection from "Driving the Market Process: 'Alertness' Versus Innovation and 'Creative Destruction'" in the Quarterly Journal of Austrian Economics. The full article is here.] Joseph Schumpeter’s theory of entrepreneurship significantly diffeSamuel Bostaph [This is a selection from "Driving the Market Process: 'Alertness' Versus Innovation and 'Creative Destruction'" in the Quarterly Journal of Austrian Economics. The full article is here.] Joseph Schumpeter’s theory of entrepreneurship significantly differs from that of Israel Kirzner. This is particularly apparent in Schumpeter’s argument that entrepreneurial activity is characteristic of both market and non-market economies and similarly drives their development. His explanation reveals his moorings in conventional neoclassical microeconomic theory, rather than in Austrian School market process theory. There are several serious flaws in Schumpeter’s theory of entrepreneurship. The Walrasian general equilibrium model on which he bases his theories of development and business cycles profoundly misrepresents the market process for reasons extensively treated elsewhere—particularly in the critiques of Mises and other Austrian School theorists. This is apparently what leads him to apply his entrepreneurial deus ex machina to both market and non-market contexts to the detriment of an understanding of either. In addition, his entrepreneurial deus ex machina as disruptor of general equilibrium lacks reasoned motivation. It is not a pursuer of profit opportunities, it is a Prometheus without a first cause, a mere pragmatic device to get things going. Schumpeter’s approach even runs opposite to the 1870s Marginal Revolution shift from production-driven to consumer-driven market process theory. His consumers are the tail that is wagged by the entrepreneurial dog. Schumpeter also posits innovations as acts of entrepreneurship without an explanation of the source of the “new possibilities” that are used in innovation. He denies that they are found or created by entrepreneurship; they just come into existence somehow, lie about for awhile, are stumbled upon and get applied. His perfect knowledge assumption for a general equilibrium to exist in a market economy actually removes any rational source for entrepreneurial activity. Kirzner’s theory of entrepreneurship has obvious and substantial moorings in Austrian School market process theory as it has developed through the work of Menger, Mises, and Hayek. His extensive development of the specifics of the entrepreneurial aspect of human action has added significantly to our understanding of it. In sharp contrast to Schumpeter’s ad hoc deus ex machina, Kirzner’s entrepreneurial concept is founded on consumer sovereignty and enhances our understanding of how the market process aids individuals in their attempts to achieve chosen ends. Nevertheless, there are discordant elements in Kirzner’s vision. To find the essence of entrepreneurship in “alertness” to profit opportunities is insightful, but there must be more to it than that. It takes an act of will to be alert, and a further act of will to decide to do something about it. The capacity to be alert to opportunities and to strive to profit from them is gutsy and not always present all the time or in all people. Further, Kirzner’s own comparison of his concept of entrepreneurship with that of Schumpeter is inadequate in that he accedes to Schumpeter’s “ideal type” view of “the entrepreneur,” rather than being—as Kirzner himself recognizes—an aspect of human consciousness present in exchange relations. He does this when he characterizes the difference between their respective views as one between that of the entrepreneur as disrupter of equilibrium versus that of equilibrator, thus leaving out the ignorance, uncertainty, and purposefulness that give rise to the entrepreneurial aspect of all human action only in the market process. It is also difficult to separate innovation from entrepreneurship, if entrepreneurship is entwined with “boldness, self-confidence, creativity and innovative ability,” as Kirzner says it is. Expanding the definition of “arbitrage” to include innovation seems more like a slight of the hand than an argument. A focused Austrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46462The Elite Under Capitalismhttp://feedproxy.google.com/~r/MisesMedia/~3/X6WsXSIzW80/46488
<p>In a free society there is no other means to avoid the evils resulting from one's fellows' bad judgment than to induce them to alter their ways of life voluntarily. Where there is freedom, this is the task incumbent upon the elite.</p>
<p>Originally published in <em>The Freeman</em>, January 1962.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/X6WsXSIzW80" height="1" width="1" alt=""/>Ludwig von Mises<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/static-page/img/MisesU_ReqReadingsAudio_750x516_20190516.jpg?itok=hIeuJyis" width="240" alt="Mises University Required Reading" title="Mises University Required Reading" />46488May 16, 2019 - 1:30 PMFront page feedno In a free society there is no other means to avoid the evils resulting from one's fellows' bad judgment than to induce them to alter their ways of life voluntarily. Where there is freedom, this is the task incumbent upon the elite. Originally published iLudwig von Mises In a free society there is no other means to avoid the evils resulting from one's fellows' bad judgment than to induce them to alter their ways of life voluntarily. Where there is freedom, this is the task incumbent upon the elite. Originally published in The Freeman, January 1962. Austrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46488In the Footsteps of Donabedian: The US News and World Report Hospital Ranking Systemhttp://feedproxy.google.com/~r/MisesMedia/~3/YIZQbR0wQxs/46477
<p>Quality ratings of hospitals and physicians: help or hindrance? Surely, the general public demands and is entitled to an assessment of hospital quality based on sound methodology. And ratings coming from the private sector are far more likely to be unbiased and to adjust to an ever changing healthcare landscape than those coming from the government and public policy sector. But is there a downside to scrutinizing the healthcare enterprise?</p>
<p>We have a fascinating conversation with one of the most knowledgeable persons on the topic. <a href="https://twitter.com/benharder" target="_blank">Ben Harder</a> is Chief of Health Analysis at <em>US News and World Report</em> and oversees the team of analysts and statisticians who produce the most recognized ranking of hospitals in the country. Ben holds a Bachelor of Science in Biological Anthropology from Harvard University and began his career in health and science journalism before taking the job of quality czar at <em>US News and World Report</em>.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/YIZQbR0wQxs" height="1" width="1" alt=""/>Michel Accad, Anish Koka<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/static-page/img/TheAccad%26KokaReport_750x516_v2_20181129.png?itok=0dtLpSdh" width="240" alt="The Accad & Koka Report" title="The Accad & Koka Report" />46477May 16, 2019 - 11:45 AMFront page feedno Quality ratings of hospitals and physicians: help or hindrance? Surely, the general public demands and is entitled to an assessment of hospital quality based on sound methodology. And ratings coming from the private sector are far more likely to be unbiaMichel Accad, Anish Koka Quality ratings of hospitals and physicians: help or hindrance? Surely, the general public demands and is entitled to an assessment of hospital quality based on sound methodology. And ratings coming from the private sector are far more likely to be unbiased and to adjust to an ever changing healthcare landscape than those coming from the government and public policy sector. But is there a downside to scrutinizing the healthcare enterprise? We have a fascinating conversation with one of the most knowledgeable persons on the topic. Ben Harder is Chief of Health Analysis at US News and World Report and oversees the team of analysts and statisticians who produce the most recognized ranking of hospitals in the country. Ben holds a Bachelor of Science in Biological Anthropology from Harvard University and began his career in health and science journalism before taking the job of quality czar at US News and World Report. Austrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46477Can the Fed Keep This Long Cycle Going?http://feedproxy.google.com/~r/MisesMedia/~3/m2x8MB8cIXk/46435
<p>Our current super-long economic cycle is a monetary curse. Under sound money it would not exist, and under the pre-1914 gold standard, it never occurred. The present business cycle expansion in the US — the longest ever — comes in the wake of three recent super-cycle expansions: 1991-2000, 1982-90, and 1961-69. Arguably, the first super-long cycle was in the early years of the Federal Reserve, from 1921-9.</p>
<p>What is the “secret of long life” for these business cycle expansions? It is repeated stimulation by the Fed in response to any sign of economic slowdown and related danger. Any downward natural rhythm of prices (sometimes misleadingly described as “disinflationary forces”) boosts the scope for central-bank stimulation at any stage of the business cycle (whether to accelerate recovery from a trough or in combating potential weakness later).</p>
<p>The downward rhythm could stem from a bout of technological change (in this cycle: technological changes) including globalization putting direct downward pressure on costs or a surge of productivity growth. Where the monetary regime is pursuing a price or inflation target, the downward rhythm means that the central bank can engage in “stimulation” rather than allow prices widely to fall as would occur in the context of sound money.</p>
<p>Under the pre-1914 gold standard, by contrast, periods of sustained price falls across goods and services markets (including business cycle recessions) were an essential part of the process by which goods and services prices on average in the long run reverted to the mean. Confidence among the public in that reversion was fundamental to money’s reputation as a store of value.</p>
<p>In the fiat money world, any pull-back in goods prices is an opportunity for monetary stimulus. Seizing that opportunity is essential to the generation of the long cycle. The ultimately highly destructive by-product of stimulus under these conditions is asset inflation. In the present cycle, there has been unprecedented opportunity.</p>
<p>The building blocks of the super-long cycle are the sub-cycles described as “growth cycles.” The sustained periods of above-trend growth (around 2 years on average since the 1950s) are labeled "growth cycle upturns" and of below trend as "growth cycle downturns" or growth recessions (slightly less than 2 years on average). The Fed has been determined on many an occasion, not always with success, to use its stimulus tools to prevent a growth cycle downturn developing into a full recession.</p>
<p>According to the Economic Cycle Research Institute, there have been already three completed growth cycles in the present super-long business cycle. We are now in the downturn phase of the fourth (from its peak in April 2018).</p>
<p>Since early this year the Powell Fed has been on the job of combating the downturn and President Trump has a key interest in their success. The extent of recessionary forces (including chickens coming home to roost from earlier monetary inflation) could be stronger than what any of these Fed officials now estimate (and too great for any fine-tuning to impact). Or they may miscalculate and do too little too late.</p>
<h4>"Long Cycles" of the Past</h4>
<p>We can turn to the laboratory of history for enlightenment.</p>
<p>First, there is the long cycle of 1921-9 (broken by a very mild recession from October 1926 to November 1927 which is more akin to growth cycle downturn than a significant recession). The Benjamin Strong Fed took advantage of disinflation from rapid productivity growth and global commodity glut to re-ignite the boom and give the faltering stock market a “coup de whiskey.”</p>
<p>When it came to the next growth cycle downturn emerging in late 1928/early 1929 the Fed under new leadership was now determined to crack the speculative craze in Wall Street. President Hoover (inaugurated March 1929) agreed. In any case there was no concern in the Fed or marketplace about a possible serious slowdown notwithstanding foggy recessionary signals from Germany since Autumn 1928.</p>
<p>Second, take the long cycle of 1961-9. Record productivity growth in the early 60s was a powerful “disinflationary” influence, allowing the Fed to run an aggressive stimulatory policy without the CPI rising (almost flat until 1965). Asset inflation was virulent. Belatedly, the Martin Fed reacted in Winter 1965/6 to a sudden jump in reported inflation, but lost its nerve as the economy slowed sharply, the equity markets started to tank, and the Johnson White House piled the pressure on. There was the notorious stimulus imparted by the Martin Fed in Winter 1966-7. The stimulus set the stage for a powerful economic rebound into 1967-8; in the midst of the Vietnam War and slowing productivity growth CPI inflation took off.</p>
<p>Third, the long cycle expansion of 1982-90 features the great monetary stimulus of Paul Volcker when he cooperated with President Reagan’s new Treasury Secretary, James Baker, in devaluing the dollar. The notorious Plaza accord (Autumn 1985) came in the middle of a difficult growth cycle downturn ahead of crucial mid-term elections (November 1986). The subsequent strong economic upswing of the late 1980s was marred by resumed high inflation and asset inflation around the globe (Japan the epicenter).</p>
<p>Fast forward to the present long cycle expansion (skipping through the Greenspan Fed’s repeated re-ignition of the expansion in the long 1990s cycle whether in 1995/6 or 1998).</p>
<p>The Bernanke Fed responded to the growth cycle downturn of February 2012 to January 2013 (the mover was the European sovereign debt crisis) with radical monetary stimulus. The next growth cycle slowdown, December 2014 to May 2016, (energy bubble burst, China “recession”) was met by the Yellen Fed scrapping all pre-planned rate rises for almost an entire year (2016) and foreign central banks engaging in enhanced monetary radicalism (QE and negative rates for example in Europe and Japan). Powerful disinflation globally (especially commodity glut and digitalization) made all this possible without jettisoning the 2 per cent inflation standard.</p>
<p>Then we come to the fourth growth cycle slowdown which <a href="https://www.businesscycle.com/">ECRI</a> dates from Spring 2018, led by the emerging markets (including China) and Europe. The Powell Fed, convinced that the big business tax cuts and de-regulation would triumph over any recessionary forces from abroad, continued at first with pre-ordained rate rises. Now with disinflation continuing and more recognition that despite everything the US is indeed in a growth cycle downturn, these have ceased.</p>
<p>During the early months of this year the dominant view in the marketplace has been that “Fed action” will be successful in forestalling the passage of the current growth cycle downturn into recession and that a new growth cycle upturn will indeed emerge by Winter 2019/2020. There is hardly any noticeable anxiety that this next growth cycle upturn will be accompanied (unlike recent previous growth cycle upturns) by a serious uptick of reported goods and services inflation. Yet who can be so sure? Downward price pressure from digitalization could suddenly ease. The extent of monetary inflation overhang in goods and services markets is unknowable.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/m2x8MB8cIXk" height="1" width="1" alt=""/>Brendan Brown<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/moneyprint.PNG?itok=REhHbrZa" width="240" alt="moneyprint.PNG" />46435May 16, 2019 - 11:00 AMFront page feedno Our current super-long economic cycle is a monetary curse. Under sound money it would not exist, and under the pre-1914 gold standard, it never occurred. The present business cycle expansion in the US — the longest ever — comes in the wake of three recenBrendan Brown Our current super-long economic cycle is a monetary curse. Under sound money it would not exist, and under the pre-1914 gold standard, it never occurred. The present business cycle expansion in the US — the longest ever — comes in the wake of three recent super-cycle expansions: 1991-2000, 1982-90, and 1961-69. Arguably, the first super-long cycle was in the early years of the Federal Reserve, from 1921-9. What is the “secret of long life” for these business cycle expansions? It is repeated stimulation by the Fed in response to any sign of economic slowdown and related danger. Any downward natural rhythm of prices (sometimes misleadingly described as “disinflationary forces”) boosts the scope for central-bank stimulation at any stage of the business cycle (whether to accelerate recovery from a trough or in combating potential weakness later). The downward rhythm could stem from a bout of technological change (in this cycle: technological changes) including globalization putting direct downward pressure on costs or a surge of productivity growth. Where the monetary regime is pursuing a price or inflation target, the downward rhythm means that the central bank can engage in “stimulation” rather than allow prices widely to fall as would occur in the context of sound money. Under the pre-1914 gold standard, by contrast, periods of sustained price falls across goods and services markets (including business cycle recessions) were an essential part of the process by which goods and services prices on average in the long run reverted to the mean. Confidence among the public in that reversion was fundamental to money’s reputation as a store of value. In the fiat money world, any pull-back in goods prices is an opportunity for monetary stimulus. Seizing that opportunity is essential to the generation of the long cycle. The ultimately highly destructive by-product of stimulus under these conditions is asset inflation. In the present cycle, there has been unprecedented opportunity. The building blocks of the super-long cycle are the sub-cycles described as “growth cycles.” The sustained periods of above-trend growth (around 2 years on average since the 1950s) are labeled "growth cycle upturns" and of below trend as "growth cycle downturns" or growth recessions (slightly less than 2 years on average). The Fed has been determined on many an occasion, not always with success, to use its stimulus tools to prevent a growth cycle downturn developing into a full recession. According to the Economic Cycle Research Institute, there have been already three completed growth cycles in the present super-long business cycle. We are now in the downturn phase of the fourth (from its peak in April 2018). Since early this year the Powell Fed has been on the job of combating the downturn and President Trump has a key interest in their success. The extent of recessionary forces (including chickens coming home to roost from earlier monetary inflation) could be stronger than what any of these Fed officials now estimate (and too great for any fine-tuning to impact). Or they may miscalculate and do too little too late. "Long Cycles" of the Past We can turn to the laboratory of history for enlightenment. First, there is the long cycle of 1921-9 (broken by a very mild recession from October 1926 to November 1927 which is more akin to growth cycle downturn than a significant recession). The Benjamin Strong Fed took advantage of disinflation from rapid productivity growth and global commodity glut to re-ignite the boom and give the faltering stock market a “coup de whiskey.” When it came to the next growth cycle downturn emerging in late 1928/early 1929 the Fed under new leadership was now determined to crack the speculative craze in Wall Street. President Hoover (inaugurated March 1929) agreed. In any case there was no concern in the Fed or marketplace about a possible serious slowdown notwithstanding foggy recessionary signals from Germany since Autumn 1928. SecoAustrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46435Losing Income Tax Privacy Is a Real Dangerhttp://feedproxy.google.com/~r/MisesMedia/~3/k8q2Pk9YipY/46439
<p>Last week the New York Times published some of President Trump’s 1980s and 1990s tax returns information. The information detailed President Trump’s financial difficulties during that time. While you would not know it from reading some media reports, this is old news. In fact, President Trump openly discussed his financial difficulties on his popular reality television show.</p>
<p>What should be of great concern is the possibility that the person who leaked the returns — who the paper says has legal access to President Trump’s tax records — is an IRS employee seeking to undermine the president. This would hardly be the first time an IRS employee has leaked confidential information because he disagreed with the taxpayer’s politics. In 2014 the agency had to pay the National Organization for Marriage 50,000 dollars after an IRS employee gave names of the group’s donors to the group’s opponents.</p>
<p>In 2014-2017, my Campaign for Liberty group was repeatedly threatened by the IRS because it refused to give the agency the names of and other information about its top supporters. Fortunately, the IRS rescinded the regulation forcing groups like Campaign for Liberty to violate supporters’ privacy or face legal penalties. However, campaign finance reform legislation that recently passed in the House of Representatives would require the IRS to resume collecting this information, and the New York attorney general is suing the IRS to force the agency to reinstate the regulation.</p>
<p>The right of groups like Campaign for Liberty to protect their supporters’ privacy was upheld by the Supreme Court in NAACP v. Alabama. As Justice John Marshall Harlan wrote, “Inviolability of privacy in group association may in many circumstances be indispensable to preservation of freedom of association, particularly where a group espouses dissident beliefs.”</p>
<p>Traditionally, presidents have used the IRS to harass their political opponents instead of presidents’ opponents using the IRS against them. Franklin Roosevelt audited people critical of the New Deal and supportive of the America First movement. Lyndon Johnson ordered audits of opponents, and John Kennedy shared tax return information with Washington Post editor Ben Bradlee.</p>
<p>During the Obama administration, the IRS targeted groups opposing Obamacare. The agency went after anti-Iraq War groups during the George W. Bush years.</p>
<p>If the Times did obtain Trump’s tax returns information from an IRS employee, that employee is not in the same category as whistleblowers like Edward Snowden or Chelsea Manning who exposed government wrongdoing. The leaker or leakers of President Trump’s information are releasing private tax information.</p>
<p>The IRS regularly violates the civil liberties of taxpayers generally. In fact, the income tax system forcing taxpayers to reveal potentially incriminating information on their tax returns violates the principles of a free society. Americans’ liberty and prosperity will never be secure until Congress repeals two great mistakes of 1913: the income tax and the Federal Reserve.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/k8q2Pk9YipY" height="1" width="1" alt=""/>Ron Paul<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/rs2.PNG?itok=fnNmJPfT" width="240" alt="rs2.PNG" />46439May 16, 2019 - 9:30 AMFront page feedno Last week the New York Times published some of President Trump’s 1980s and 1990s tax returns information. The information detailed President Trump’s financial difficulties during that time. While you would not know it from reading some media reports, thiRon Paul Last week the New York Times published some of President Trump’s 1980s and 1990s tax returns information. The information detailed President Trump’s financial difficulties during that time. While you would not know it from reading some media reports, this is old news. In fact, President Trump openly discussed his financial difficulties on his popular reality television show. What should be of great concern is the possibility that the person who leaked the returns — who the paper says has legal access to President Trump’s tax records — is an IRS employee seeking to undermine the president. This would hardly be the first time an IRS employee has leaked confidential information because he disagreed with the taxpayer’s politics. In 2014 the agency had to pay the National Organization for Marriage 50,000 dollars after an IRS employee gave names of the group’s donors to the group’s opponents. In 2014-2017, my Campaign for Liberty group was repeatedly threatened by the IRS because it refused to give the agency the names of and other information about its top supporters. Fortunately, the IRS rescinded the regulation forcing groups like Campaign for Liberty to violate supporters’ privacy or face legal penalties. However, campaign finance reform legislation that recently passed in the House of Representatives would require the IRS to resume collecting this information, and the New York attorney general is suing the IRS to force the agency to reinstate the regulation. The right of groups like Campaign for Liberty to protect their supporters’ privacy was upheld by the Supreme Court in NAACP v. Alabama. As Justice John Marshall Harlan wrote, “Inviolability of privacy in group association may in many circumstances be indispensable to preservation of freedom of association, particularly where a group espouses dissident beliefs.” Traditionally, presidents have used the IRS to harass their political opponents instead of presidents’ opponents using the IRS against them. Franklin Roosevelt audited people critical of the New Deal and supportive of the America First movement. Lyndon Johnson ordered audits of opponents, and John Kennedy shared tax return information with Washington Post editor Ben Bradlee. During the Obama administration, the IRS targeted groups opposing Obamacare. The agency went after anti-Iraq War groups during the George W. Bush years. If the Times did obtain Trump’s tax returns information from an IRS employee, that employee is not in the same category as whistleblowers like Edward Snowden or Chelsea Manning who exposed government wrongdoing. The leaker or leakers of President Trump’s information are releasing private tax information. The IRS regularly violates the civil liberties of taxpayers generally. In fact, the income tax system forcing taxpayers to reveal potentially incriminating information on their tax returns violates the principles of a free society. Americans’ liberty and prosperity will never be secure until Congress repeals two great mistakes of 1913: the income tax and the Federal Reserve. Austrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46439Fed Nominee Judy Shelton Wants Sound Money — and Lots of Ithttp://feedproxy.google.com/~r/MisesMedia/~3/hi7UF_CFQaM/46463
<p>Bloomberg <a href="https://www.bloomberg.com/news/articles/2019-05-10/white-house-considers-economist-shelton-for-fed-board-vacancy"> reported </a> this week that the Trump Administration is considering Judy Shelton for one of the two vacant positions on the Federal Reserve Board of Governors. The good news is that Ms. Shelton is <em>not </em>a technically trained academic economist, indoctrinated in the prevailing orthodoxy. She holds a doctorate in business administration from the University of Utah and has spent most of her career in the world of free-market policy think tanks, including stints at the Hoover Institute and the Atlas Network. She also writes refreshingly and articulately in favor of the gold standard, or some version of it.</p>
<p>The bad news is that she leans heavily toward supply-side economics, which is deeply flawed on monetary policy. Like most supply-siders, the position she advocates may be summed up in the motto, “I favor sound money—and plenty of it.”</p>
<p>This contradictory position was clearly evident in her recent Wall Street Journal op-ed, <a href="https://www.wsj.com/articles/the-case-for-monetary-regime-change-11555873621"> The Case for Monetary Regime Change </a> . In this piece Shelton attributes blame for “the devastating 2008 global meltdown” to the Fed’s “influence over the creation of money and credit.” She then goes on to criticize the Fed’s policy of paying interest on excess reserves for slowing down the economic recovery from the post-crisis depression. Her argument is that paying interest on excess reserves discouraged the banking system from fully lending out the enormous amount of reserves that gushed forth into the system through the Fed’s QE programs. While this is true, the Fed’s policy was still very expansionary. If we examine the data in the chart below, we see that the from mid-2011 to 2017, the year-over-year (YOY) growth rates of the money supply as measured by the Fed aggregates of M2 and MZM varied between 5% and 10%. These slightly <em>exceeded</em> the monetary growth rates recorded during the run-up of the housing bubble from the beginning of 2002 through 2005, which culminated in the “devastating global meltdown” that Shelton bemoaned a few sentences earlier. Thus, Shelton considers the <em>same</em> rates of monetary growth inflationary in the earlier period but contractionary in the later period. She seems to have picked up this peculiar argument from the Cato Institute's George Selgin, which I <a href="https://mises.org/wire/yes-fed-really-holding-down-interest-rates"> criticized </a> a few years ago.</p>
<div class="media media-element-container media-image_no_caption"><a href="https://mises-media.s3.amazonaws.com/styles/max_1160/s3/moneystock.png?itok=fMHE05ZC" title="moneystock.png" class="colorbox" data-colorbox-gallery="gallery-file-83588-Lnp3eU6SpWo" data-cbox-img-attrs="{"title": "", "alt": ""}"><img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/max_full/s3/moneystock.png?itok=Zjja14vh" width="693" height="267" alt="moneystock.png" title="" /></a></div>
<p>Shelton also reveals the flaws in her supply-side position when she argues that a gold standard and a Bretton Woods-like regime, by “linking the supply of money and credit to gold,” would both be effective in “redress[ing] inflationary pressures.” Shelton’s position here shows a lack of theoretical and historical awareness of the vast differences between the classical gold standard and the Bretton Woods System in their nature and operation. The former was a genuine gold standard in which gold coins were in circulation and all bank notes and deposits were instantaneously redeemable in gold. The Bretton Woods System on the other hand was a form of “price-rule monetarism,” in which the Fed followed a rule to target a legally mandated price of gold by buying and selling gold, foreign currencies, or domestic securities. There was no gold in circulation as a medium of exchange and the convertibility of dollars into gold was restricted to foreign governments and other official institutions.</p>
<p>The historical Bretton Woods system had inherent flaws that led to its slow motion inflationary collapse in the late 1960s and its disappearance in 1971. This did not stop supply-siders, including Shelton, in her 1994 book <a href="https://www.amazon.com/Money-Meltdown-Judy-Shelton/dp/0684863944/ref=tmm_pap_swatch_0?_encoding=UTF8&qid=&sr="> Monetary Meltdown </a> , for penning proposals for an updated version of Bretton Woods. This <a href="https://pdfs.semanticscholar.org/c3a3/efc17997417f12057750a450571f7d35237e.pdf"> article </a> contains my critique of an earlier supply-side proposal for a monetary system based on a gold price rule.</p>
<p>Overall, I consider Judy Shelton among the best politically palatable (at least to Republicans) candidates for Federal Reserve Board of Governors. But, unfortunately, this is weak praise, given that the very existence and function of the Fed is a destructive influence on the U.S. and global economy.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/hi7UF_CFQaM" height="1" width="1" alt=""/>Joseph T. Salerno<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/fed2_5.PNG?itok=FClqaJ0d" width="240" alt="fed2_5.PNG" />46463May 16, 2019 - 6:00 AMFront page feedno Bloomberg reported this week that the Trump Administration is considering Judy Shelton for one of the two vacant positions on the Federal Reserve Board of Governors. The good news is that Ms. Shelton is not a technically trained academic economist, indocJoseph T. Salerno Bloomberg reported this week that the Trump Administration is considering Judy Shelton for one of the two vacant positions on the Federal Reserve Board of Governors. The good news is that Ms. Shelton is not a technically trained academic economist, indoctrinated in the prevailing orthodoxy. She holds a doctorate in business administration from the University of Utah and has spent most of her career in the world of free-market policy think tanks, including stints at the Hoover Institute and the Atlas Network. She also writes refreshingly and articulately in favor of the gold standard, or some version of it. The bad news is that she leans heavily toward supply-side economics, which is deeply flawed on monetary policy. Like most supply-siders, the position she advocates may be summed up in the motto, “I favor sound money—and plenty of it.” This contradictory position was clearly evident in her recent Wall Street Journal op-ed, The Case for Monetary Regime Change . In this piece Shelton attributes blame for “the devastating 2008 global meltdown” to the Fed’s “influence over the creation of money and credit.” She then goes on to criticize the Fed’s policy of paying interest on excess reserves for slowing down the economic recovery from the post-crisis depression. Her argument is that paying interest on excess reserves discouraged the banking system from fully lending out the enormous amount of reserves that gushed forth into the system through the Fed’s QE programs. While this is true, the Fed’s policy was still very expansionary. If we examine the data in the chart below, we see that the from mid-2011 to 2017, the year-over-year (YOY) growth rates of the money supply as measured by the Fed aggregates of M2 and MZM varied between 5% and 10%. These slightly exceeded the monetary growth rates recorded during the run-up of the housing bubble from the beginning of 2002 through 2005, which culminated in the “devastating global meltdown” that Shelton bemoaned a few sentences earlier. Thus, Shelton considers the same rates of monetary growth inflationary in the earlier period but contractionary in the later period. She seems to have picked up this peculiar argument from the Cato Institute's George Selgin, which I criticized a few years ago. Shelton also reveals the flaws in her supply-side position when she argues that a gold standard and a Bretton Woods-like regime, by “linking the supply of money and credit to gold,” would both be effective in “redress[ing] inflationary pressures.” Shelton’s position here shows a lack of theoretical and historical awareness of the vast differences between the classical gold standard and the Bretton Woods System in their nature and operation. The former was a genuine gold standard in which gold coins were in circulation and all bank notes and deposits were instantaneously redeemable in gold. The Bretton Woods System on the other hand was a form of “price-rule monetarism,” in which the Fed followed a rule to target a legally mandated price of gold by buying and selling gold, foreign currencies, or domestic securities. There was no gold in circulation as a medium of exchange and the convertibility of dollars into gold was restricted to foreign governments and other official institutions. The historical Bretton Woods system had inherent flaws that led to its slow motion inflationary collapse in the late 1960s and its disappearance in 1971. This did not stop supply-siders, including Shelton, in her 1994 book Monetary Meltdown , for penning proposals for an updated version of Bretton Woods. This article contains my critique of an earlier supply-side proposal for a monetary system based on a gold price rule. Overall, I consider Judy Shelton among the best politically palatable (at least to Republicans) candidates for Federal Reserve Board of Governors. But, unfortunately, this is weak praise, given that the very existence and function of the Fed is a destructive influence on the U.S. and global economy. Austrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46463Juan de Mariana on Creating Money Out of Thin Airhttp://feedproxy.google.com/~r/MisesMedia/~3/z9HRBPd379E/46460
<p>[<em>A Selection From: "On the Coinage" by Juan de Mariana Translated by Hazzard Bagg for the <a href="http://mises-media.s3.amazonaws.com/Quarterly%20Journal%20of%20Austrian%20Economics%2021%20no%202%20Summer%202018.pdf">Quarterly Journal of Austrian Economics 21, no. 2 (Summer 2018)</a>.</em>]</p>
<div>In ancient times they used to exchange things without using money: a goat for a sheep, a cow for some grain. Then they figured out that it would be easier if merchandise and grain were exchanged for metals: gold, silver, and copper. Ultimately, so that it would not forever be necessary to weigh metals out for their dealings and transactions with one another (which is quite a pain), they decided that the various metals should be divided into units by public authority and that these units should be stamped according to the weight of each. This is the proper and natural way to use money that Aristotle tells us about in the first book of the <em>Politics</em>; those other ways of turning a trick to cheat the people were developed and discovered by men who could not care less about transparency and fairness. But even if the prince is not taxing the other commodities and is not laying claim to them, he often takes a cut of the currency; this does not mean that there is any less blame in doing this, nor is it any less of a subversion of, and stain upon, the laws of nature. But these mysterious, dolled-up schemes deceive most people with the result that the disease is felt less acutely.</div>
<div> </div>
<p>“What harm is there,” they say, “if the prince takes a half or a quarter for himself, and if what is left over for individuals is spent at a value that is no less than the original one? Indeed, you buy clothing and food just like before. Where is the loss? For their money is used only to buy necessities.” So easily are the people tricked that they put up with the debasing of the coinage! Thus, the prince has more power over the coinage than he does over other commodities. The mints, mint officials, their operations, and the bureaucrats are completely in his power and control. Because of this, he is able to blend metals without anyone stopping him, he can introduce a new coinage in place of the old one stamped with a new mark, with no more honesty than if he were directing the other possessions of his citizens to himself with blatant force.</p>
<p>You might ask, what should be done when a confident enemy challenges in war? Add to that one who is aggressive because of a fresh victory and strong in troops and supplies, and when there is no money available with which a soldier might be recruited or a salary paid. Or will you suppose that he ought to surrender and that every type of misfortune should be endured so that the coinage can remain intact? I would think that every possible remedy should be tried before it should come to the extreme measure of debasing the currency. But if a major crisis is pressing and the safety of the people is in jeopardy and the affected citizens cannot be forced to enter into an agreement whereby the prince can commandeer the other possessions of his subjects to come to the aid of the country in its moment of need, only then will he be able to blend metals or snip off a portion of the weight, but with the proviso that the permission to debase should come to an end along with the war and that the blemish not be permanent, and then that the bad money that necessity forced upon them be straightaway turned in and retired, and that the proper old coinage be restored in place of that bad one for those who were holding it in good faith.</p>
<p>Frederick Augustus, the second of that name, was laying siege to Faenza in Flaminia during a very harsh winter. There was no money for soldiers’ pay, everywhere soldiers were slipping away, and units were being abandoned continuously. Lifting the siege was a disgraceful and serious thing, but continuing it was a difficult one. He marked money made of rawhide with the value of a gold coin, and with this conceit he got out of the tight spot. Once he had taken the city as victor, he exchanged the rawhide coins for as many gold ones as he had promised. The source is Collenutius in Book Four of his <em>History of Naples</em>. This example has been followed in similar crises certainly long ago but also in recent times, and coinage quite often made of hide but sometimes even out of paper has been marked without harm or rebuke. However, if a prince thinks that it is within his purview to debase the currency outside of one of these crises just to fill a deficit in his treasury, something that is more or less always a problem, I proclaim certain destruction—nor will the respite be long-lasting—as the following terrible afflictions demonstrate.</p>
<p>The first consequence will be the high cost of all commodities and food—doubtless not less than the amount that will have been subtracted from the quality of the currency. For people do not value a currency any more than the quality and amount of metal allows—not even if there are strict laws against doing this. Indeed, at that point the people will bemoan the fact that they have been tricked by an illusion, and they will sense that the new currency that has been substituted for the old one is not worth as much as the former currency when they need much greater resources than they used to in order to feed their families. Or are we serving up delusions rather than things that are plain to see from the accuracy of our chronicles? King Alfonso of Castile, known as “The Wise,” as soon as he gained control of the crown and possessions of the realm, substituted a bad currency, called the <em>burgalesa</em>, for the <em>pepión</em>, which was the coinage in use at the time. In order to relieve the high cost of things that immediately followed, he set the value of merchandise with a new law. This solution made matters worse since no one was willing to sell at the set price. And so, this scheme to set prices fell apart right from the start. The problem of high prices went on for a while. I conclude that damage to the coinage was the primary reason for the disaffection of the people and for his replacement by Sancho and his son before the end of his life. For since Alfonso was stubborn, in the seventh year of his reign he recalled the <em>burgalesa </em>and introduced a coinage that was called “black” because of the poor quality of the metal.<a class="see-footnote" id="footnoteref1_eo0p6t7" title="The relative blackness of a coin indicates its poor quality by revealing its copper content. The more copper a coin contains, the blacker it will become via oxidation." href="#footnote1_eo0p6t7">1</a></p>
<p>Alfonso XI, in no way chastened by the example of his great grandfather, also minted a coinage made from metal that was not of high quality that they called <em>novenes </em>and <em>coronados</em>. So that the prices of food and other items not increase, he took the sensible enough precaution that a mark—that is to say two-thirds of a pound—of silver not be worth more <em>maravedís </em>than it was worth previously (that is, 125). This ineffectual measure, however, turned out to be a useless precaution: inflation followed, the value of silver skyrocketed. Enrique the second, the son of this Alfonso, upon gaining the throne after the murder of his brother, King Pedro, had recourse to this solution in order to pay the salaries of his foreign provincial soldiers (to whom he owed his life and his throne) because his accounts were in a lot of trouble, since both the public and his personal treasuries had been exhausted. He struck two types of coinage, <em>reales </em>and <em>cruzados</em>, doubtless valued above the amount of metal in them. We have examined the reales of King Pedro and those of his brother Enrique; indeed, Pedro’s are of good silver of the kind that is struck in our own day in Castile; Enrique’s are blackish, evidently with a lot of copper added in. In order to alleviate the rise in the prices of things that followed (together with the dismay of people in the provinces), after a fresh appraisal, he was compelled to subtract two thirds from the value of both types of coinage. Thus, things that have been dreamed up so ingeniously to save us do frequently fall the other way. Oh, the short-sighted and blind minds of men!</p>
<p>That much the same thing befell Enrique’s son, King Juan, is evident from his laws. For, being out of money because of the wars that he waged, first against the Portuguese and then incessantly against the English, he struck a coinage that he called the blanca in order to send the money that he owed to the Duke of Lancaster, his rival for the throne, in accordance with the treaty that he had recently entered into with him. Presently the prices of food went up. To alleviate this problem, he soon reduced the value of the new currency by about a half. But the high prices did not let up, as he himself admitted at the Cortes at Burgos the following year in 1388. Why should I bring up the kings who followed? I find that the same collapse has developed from the same corrupt origin.</p>
<p>So much for high prices... Another problem flows from the first: Commercial activity that for the most part makes up both public and private wealth is slowed down by a debased coinage. The low quality of the currency clearly frightens shopkeepers and their customers; the high prices that follow on from this problem also frighten them. But if the prince were to set prices for things by fiat (as always seems to happen), instead of a cure, the problem will get much worse since there is no one who will agree to sell for that price, which is so clearly unfair and not squared with commonly recognized valuation. Once commercial activity has stopped, there is no category of problem which does not befall such a people. Certainly, the provincials will be of necessity stretched thin in two ways: first, due to the slowdown in buying and selling, the income from which the majority of the population lives will grind to a halt. These people are craftsmen for the most part and people whose hopes for a meal lie in their hands and in working every day—which is most people. Second, the prince will be forced either to completely withdraw the bad currency which is the cause of the problem or to issue a currency that is worse with its previous value reduced. So it happened that in the reign of King Enrique the second of Castile, in spite of this, he subtracted two thirds from the value of his new currency. Whoever found themselves holding that money suddenly discovered that, by the power of a word, what had been three hundred gold pieces had been reduced to no more than one hundred.</p>
<p>We seem to be kidding. Let us set aside the past. From the moment that he left the Church, Henry, the eighth king of England by that name, ran into many problems. Among these problems he debased the currency. For that which had an eleventh part of copper mixed in was gradually reduced to the point that it retained only a sixth part of silver. With a fresh decree he swept up the old money from the provincials and exchanged it for an equal number and weight of the new, debased currency. The people remained silent as long as they feared the savagery of that man, who thought of bleeding his citizens as a game. But after his death, his son Edward brought it about that the value of this coinage was decreased by half. Edward’s sister, Elizabeth, also subtracted another half from the remaining value once she gained the throne. So it was the case that those people who used to have four hundred gold pieces in that currency had it reduced to one hundred once three quarters of the value had been subtracted. And the damage did not stop there; that currency was thereupon taken out of circulation with no way to restore the loss, a scandalous mugging. Sanders, a scholar and at one time in the past a friend of mine, confirms this toward the end of Book One of his <em>On the English Schism</em>.</p>
<p>With commercial activity suspended and, as a consequence, with the provincials stretched thin, the pitiable disaster of royal taxes will come to the fore. The prince will be punished in proportion to how much he has enjoyed the profit from that currency. For it cannot be a good situation for a king to have a kingdom which is practically struggling physically; nor will the provincials be in a position to be stretched thin by paying taxes. Also, tax collectors will not bring in as much in royal taxes as they had before. I read that when King Alfonso XI of Castile was a child, royal officials were forced to submit to an audit; I have gleaned that all the royal taxes for the year came to 1,600,000 <em>maravedíes</em>. Those <em>maravedíes </em>were worth more than ours and each one was worth about as much as seventeen of ours, still an undeniably tiny and laughable amount. The writer of the history of that king describes how one of the two causes of this disastrous situation was the debasing of the coinage carried out by quite a few of the previous kings. Evidently, with commercial activity brought to a standstill, the subjects were reduced to a state of penury and were unable to bring into the treasury what they had typically brought in during normal times.</p>
<p>Who would not see that this is a tremendous handicap? Who would not admit this? Would you then prefer that there be a universal hatred on the part of the people that will inevitably overwhelm the prince? Is it not preferable to be loved than to be feared? In general, all public failures are blamed on the person in charge. Philip the Fair, King of France, confessed right before his death that he faced the hatred of the people for no reason other than that the coinage had been debased, and with his last words he commanded his son Louis “Hutin” to change it. The source is Robert Gaguin. I do not read anywhere about what Louis did, but it seems to be the case that the demonstrations and hatred on the part of the people did not settle down before Enguerrand de Marigny, the author of the foul scheme, was publicly executed, as the majority of the nobles urged during the proceedings and the entire population applauded. There is no need to mention the fact that the precedent set by this disaster did not discourage Hutin’s brother, Charles the Fair, nor their mutual cousin and successor, Philip of Valois, from treading on this same path of debasing the currency in France; nor need I mention the magnitude of the public reaction. Instead, let a limit be placed upon the discussion that has been begun here. I would like to give princes one last piece of advice: if you want your state to be a healthy one, do not touch the primary foundations of commerce—units of weight, measurement, and the coinage. A many-layered swindle lies hidden behind the appearance of a quick fix.</p>
<p>[<em>The <a href="https://mises-media.s3.amazonaws.com/Quarterly%20Journal%20of%20Austrian%20Economics%2021%20no%202%20Summer%202018.pdf">full article</a> is available at the Quarterly Journal of Austrian Economics.</em>]</p>
<ul class="footnotes"><li class="footnote" id="footnote1_eo0p6t7"><a class="footnote-label" href="#footnoteref1_eo0p6t7">1.</a> The relative blackness of a coin indicates its poor quality by revealing its copper content. The more copper a coin contains, the blacker it will become via oxidation.</li>
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/z9HRBPd379E" height="1" width="1" alt=""/>Juan de Mariana<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/gold.PNG?itok=TxJHgwXC" width="240" alt="gold.PNG" />46460May 15, 2019 - 5:30 PMFront page feedno [A Selection From: "On the Coinage" by Juan de Mariana Translated by Hazzard Bagg for the Quarterly Journal of Austrian Economics 21, no. 2 (Summer 2018).] In ancient times they used to exchange things without using money: a goat for a sheep, a cow for sJuan de Mariana [A Selection From: "On the Coinage" by Juan de Mariana Translated by Hazzard Bagg for the Quarterly Journal of Austrian Economics 21, no. 2 (Summer 2018).] In ancient times they used to exchange things without using money: a goat for a sheep, a cow for some grain. Then they figured out that it would be easier if merchandise and grain were exchanged for metals: gold, silver, and copper. Ultimately, so that it would not forever be necessary to weigh metals out for their dealings and transactions with one another (which is quite a pain), they decided that the various metals should be divided into units by public authority and that these units should be stamped according to the weight of each. This is the proper and natural way to use money that Aristotle tells us about in the first book of the Politics; those other ways of turning a trick to cheat the people were developed and discovered by men who could not care less about transparency and fairness. But even if the prince is not taxing the other commodities and is not laying claim to them, he often takes a cut of the currency; this does not mean that there is any less blame in doing this, nor is it any less of a subversion of, and stain upon, the laws of nature. But these mysterious, dolled-up schemes deceive most people with the result that the disease is felt less acutely. “What harm is there,” they say, “if the prince takes a half or a quarter for himself, and if what is left over for individuals is spent at a value that is no less than the original one? Indeed, you buy clothing and food just like before. Where is the loss? For their money is used only to buy necessities.” So easily are the people tricked that they put up with the debasing of the coinage! Thus, the prince has more power over the coinage than he does over other commodities. The mints, mint officials, their operations, and the bureaucrats are completely in his power and control. Because of this, he is able to blend metals without anyone stopping him, he can introduce a new coinage in place of the old one stamped with a new mark, with no more honesty than if he were directing the other possessions of his citizens to himself with blatant force. You might ask, what should be done when a confident enemy challenges in war? Add to that one who is aggressive because of a fresh victory and strong in troops and supplies, and when there is no money available with which a soldier might be recruited or a salary paid. Or will you suppose that he ought to surrender and that every type of misfortune should be endured so that the coinage can remain intact? I would think that every possible remedy should be tried before it should come to the extreme measure of debasing the currency. But if a major crisis is pressing and the safety of the people is in jeopardy and the affected citizens cannot be forced to enter into an agreement whereby the prince can commandeer the other possessions of his subjects to come to the aid of the country in its moment of need, only then will he be able to blend metals or snip off a portion of the weight, but with the proviso that the permission to debase should come to an end along with the war and that the blemish not be permanent, and then that the bad money that necessity forced upon them be straightaway turned in and retired, and that the proper old coinage be restored in place of that bad one for those who were holding it in good faith. Frederick Augustus, the second of that name, was laying siege to Faenza in Flaminia during a very harsh winter. There was no money for soldiers’ pay, everywhere soldiers were slipping away, and units were being abandoned continuously. Lifting the siege was a disgraceful and serious thing, but continuing it was a difficult one. He marked money made of rawhide with the value of a gold coin, and with this conceit he got out of the tight spot. Once he had taken the city as victor, he exchanged the rawhide coins for as many gold ones as he had promised. The source Austrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46460Why Plea Deals Are a Gross Miscarriage of Justicehttp://feedproxy.google.com/~r/MisesMedia/~3/tvqN0qc09us/46471
<p>Bob goes solo to explain why the common practice of “offering a plea deal” is a horrible practice, which gives us little reason to trust that those convicted are actually guilty of the crimes to which they confess.</p>
<p>For more information, see <a href="https://bobmurphyshow.com" target="_blank">BobMurphyShow.com</a>. <em>The Bob Murphy Show</em> is also available on <a href="https://itunes.apple.com/us/podcast/bob-murphy-show/id1441789978?ls=1" target="_blank">iTunes</a>, <a href="https://www.stitcher.com/podcast/bob-murphy-show" target="_blank">Stitcher</a>, <a href="https://open.spotify.com/show/0tfuV0zn9W0hXuL8AkMPGI">Spotify</a>, and <a href="https://mises.org/itunes/732" target="_blank">via RSS</a>.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/MisesMedia/~4/tvqN0qc09us" height="1" width="1" alt=""/>Robert P. Murphy<img typeof="foaf:Image" src="https://mises-media.s3.amazonaws.com/styles/slideshow/s3/static-page/img/BobMurphyPodcast_750x516.png?itok=HFyx6Yti" width="240" alt="The Bob Murphy Show" title="The Bob Murphy Show" />46471May 15, 2019 - 5:15 PMFront page feedno Bob goes solo to explain why the common practice of “offering a plea deal” is a horrible practice, which gives us little reason to trust that those convicted are actually guilty of the crimes to which they confess. For more information, see BobMurphyShowRobert P. Murphy Bob goes solo to explain why the common practice of “offering a plea deal” is a horrible practice, which gives us little reason to trust that those convicted are actually guilty of the crimes to which they confess. For more information, see BobMurphyShow.com. The Bob Murphy Show is also available on iTunes, Stitcher, Spotify, and via RSS. Austrian,Economics,Austrian,Biography,Mises,Rothbard,Research,in,Austrian,Economics,Free,Market,Theory,Libertarianism,Auburn,classical,liberalism,capitalismhttps://mises.org/node/46471nonadult